IHT Planning
On death, no Inheritance tax is payable on the first £300,000 (2007/2008) of an individual's estate (this is usually referred to as the Nil Rate Band). Inheritance tax is charged at 40% on the balance over this threshold. However, all transfers between husband and wife, if gifting to a UK domiciled spouse, are exempt for Inheritance Tax and therefore no Inheritance Tax is payable on the death of the first spouse.
Since the 9th October 2007 married couples and civil partners are able to aggregate both Nil Rate Bands to give a couple an effective Nil Rate Band of £600000 (2007/2008).
There is still a strong case for the use of Discretionary Trusts for the protection of assets for future generations and the mitigation of Long Term Care costs.
Some off The Benefits Of Discretionary Trust Schemes:
- Access to funds by surviving spouse if trustees decide.
- Ensure that the assets held in trust are not assessed as capital of any beneficiary such as the surviving spouse should he or she require Long Term Care.
- Guarantee that the trust assets pass to your children rather than say your spouse's new partner should he or she remarry.
It Is Also Necessary To Consider The Following
Joint assets pass direct to the surviving spouse and do not pass under the Will. These joint assets cannot be used to fund the Discretionary Trust. It may be necessary to equalise your respective estates to ensure both spouses have sufficient sole assets to use the Nil Rate Band Discretionary Trust to best effect.
The largest asset owned in most instances is the family home. Often this is held by both parties as joint tenants. In order to ensure that each spouse has sufficient sole assets to place into the Trust it may be necessary to split the joint tenancy of the property. Each spouse would then own the property jointly as tenants in common. Although the property would still be owned jointly with your spouse, the significant difference is that on the death of the first spouse the 50% share owned by them can then be used towards satisfying the Discretionary Trust.
By specialist wording within the trust the surviving spouse can continue to own the whole property but the value of deceased's share in the property will be outside the surviving spouse's estate.
The assets within such a trust arrangement will not be regarded as the spouse's capital in an assessment should he or she require Long Term Care.
Don't delay, protect your assets.
Call NOW on: 07967 595454 or contact us today to arrange a Call Back.
Speak to Mat Lee (Head of Wills & Estates)
North Mortgages
