Inheritance planning steps
Make a will
A will can reduce your tax burden on others; giving to charity can reduce the amount to 36% tax and leaving your house to your children gives you a higher threshold and if you are married with children only £270,000 of your assets will be transferred over to you, not making the most of the IHT threshold. Why do a will.
Leaving your house to children or grand children in your will
When your children or grand children are beneficiaries of your primary residence your tax allowance increases to £500,000. This is transferable if one parent dies and leaves the house to their married partner meaning a married/civil partnership couple could leave up to £1million tax free.
Marry your partner or form a civil partnership
If you are in a committed relationship (mistakenly called common law) but not married or in a civil partnership you will be liable for tax over £325,000 of your partners assets.
You can give up to £3000 in gifts a year and £5000 for a child's wedding without it being considered as part of your estate. Any gift over this threshold your beneficiaries will need to pay tax if you die within the 7 years.
Placing assets in a trust
If you have a very large and or complex estate one option is to put assets into trust. A misconception is there is no tax to pay, there is tax to pay on entry into a trust and every 10 years, this is a complex area and you should get professional advice on how best to execute this.