When you pass away, you will always want to leave as much as you can behind for your loved ones and not the taxman. Inheritance planning is something that everyone needs to consider and starting from a young age is smart. Although it is not nice to think about, you do need to have a plan in place and know how you can leave as much behind as you can.

Inheritance Tax

The main reason that planning is so important is that Inheritance Tax (IT) can cost families an enormous amount and greatly reduce what you leave behind. IT is a tax that is paid on the estate of someone that has passed away and includes a tax on property, money, and possessions. Currently, you will pay 40% on your taxable estate.

Lowering IT

Fortunately, there are ways that you can lower your IT which is completely legal and can make a big difference. These include making a will so that you can shelter assets from inheritance tax, setting up trust within your will, gifting while you are still alive, and using your allowances – you don’t pay IT on the first £325,000 of assets.

Alternative Investment Market 

Another smart option is to use an alternative investment market portfolio to save on IT. This is because most AIM companies qualify for Business Relief, which allows shares to be passed on free of IT (once they have been held for 2 years). Of course, investing can also help you to grow your wealth over time, so this is a way to not only reduce/eliminate IT but also leave behind more for your loved ones. 

There are many benefits to an alternative investment market portfolio, including easy access to your money and the ability to transfer existing ISAs in. When you die, the portfolio could be liquidated with proceeds passed onto beneficiaries, the portfolio can remain invested for the beneficiaries or the portfolio could be liquidated to pay IT on other assets.

Get Help

Inheritance planning can be complex, but it is highly worthwhile because it can make a huge difference to what you leave behind to your loved ones. This is why it is best to speak with experienced wealth managers that will know how best to plan your estate so that you can maximize your assets and avoid paying tax in a completely legal manner.

Hopefully, this post will encourage you to take action and start planning your estate so that you can leave as much behind to loved ones as possible.

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By SARAH