Q. Being a property investor I have quite a large portfolio of properties and am beginning to feel concerned about the impact Inheritance Tax on my Estate may have on my family should anything happen to me, have you a few simple pointers that you can share?
A. The most important thing you need to do regardless of the size of your Estate if you haven’t already done so is go and have a professional will drafted by an expert who can give you advise on the best way forward with respect to who your beneficiaries might be and how the Estate should be distributed. Also, it’s worth speaking to a Financial planner too as they will be able to advise you with respect to holding assets in Trusts which can also help avoid paying too much Inheritance Tax. Dying without a properly drafted will in place could land your family with a large unexpected inheritance tax bill, not to mention the fact that those who benefit may not be the intended beneficiaries. If an individual dies without a valid will, a set of rules known as the rules of intestacy will dictate who benefits from the estate. Under the rules of intestacy, the beneficiaries and the amount they inherit are determined by the value of the estate and the family members alive at the date of the death. IHT is currently levied at a rate of 40% on the value of an estate above the tax-free threshold, which has been frozen at £325,000 per person since 2009. Married couples and civil partners are entitled to double the allowance, passing on assets to their children or other relations worth up to £650,000 before a tax charge is triggered. However following an announcement in the 2015 Budget the Government will add a “family home allowance” worth £175,000 per person to the existing £325,000 tax free allowance from April 6, 2017. This means that individuals can pass on assets worth up to £500,000, including a home, without paying any IHT at all. For married couples and civil partners, the total is £1m. This additional allowance will be gradually withdrawn for estates worth more than £2m.