What Steps You Can Take to Reduce Inheritance Tax
There are many different types of taxes that we have to pay these days, from income tax and council tax to capital gains and inheritance tax. The latter is a tax that is levied against what your loved ones inherit following your death, which in some cases can amount to huge amounts of money.
This is why many people are keen to find out how to reduce the amount that has to be paid in inheritance tax. Of course, you should first make sure that the value of your assets minus any debts will result in the amount being eligible for inheritance tax. If so, you can look at a number of ways to try and reduce this tax.
5 steps to reducing inheritance tax
There are a number of steps that you can take to try and reduce inheritance tax. These include the following.
Make sure you write a will: When you write a will you get to decide who will get what rather than this being decided under the rules of intestacy. This can help to ensure that inheritance tax is kept down.
Keep your estate at a minimum: The higher the value of the estate that you leave to a loved one, the more likely they are to have to pay this tax and the more they will end up paying. You should therefore look at keeping your estate to a minimum by taking action such as transferring insurance policies into a trust.
Make sure you are married to your partner: If you live with your partner and you pass away, he or she will still be liable to pay inheritance tax if applicable. However, if you are married to your partner, he or she will not have to pay this tax on anything that you leave to them in your will.
Seek professional advice: Inheritance tax can be a complicated subject yet a very important one, so it is a good idea to seek expert advice. For example, you can contact legal experts at The Co-op for assistance. This will enable you to benefit from up to date and valuable Co-op inheritance tax advice to try and reduce the tax on your estate.
Leave money to charity: By leaving money to charity in your will, you can reduce inheritance tax and do your bit for charity. By leaving more than 10 per cent of your estate to charity, you can knock the amount of inheritance tax down from 40 per cent to 36 per cent. This may not seem like a lot, but when you consider that inheritance tax can run into tens of thousands of pounds or more, it can end up being substantial.
These are a few of the key steps you can take to reduce inheritance tax, but it is always advisable to seek expert advice to ensure that you engage in effective estate planning.