You need to know about Inheritance Tax before you can avoid it
Popular television presenter and entertainer, Bruce Forsyth, passed away last week at the age of 89, leaving behind his wife, 6 children, 7 grandchildren and 2 great-grandchildren.
Newspaper stories published on Tuesday, report that the majority of his £17 million wealth has been left to his wife of 34 years in order to avoid Inheritance Tax. The reports have also said that current UK law states that spouses can hand over their assets without being taxed – something the Wills and Probate team at Lawson-West are keen to put into perspective.
One newspaper source is quoted as saying: “He is likely to have done that as he trusted her (his wife) to distribute the wealth among their relatives, and because she can give £650,000 away tax-free to their family, it means they end up with more.”
However, trust alone is unfortunately not enough. To ensure your estate is divided up as you wish upon your death you must have a valid Will detailing all of your wishes.
The Nil Rate Band is an allowance that every person receives, and is worth £325,000. If your estate (the amount of money that you have when you die) is not worth more than this then you will not pay Inheritance Tax. Inheritance Tax is therefore payable if the estate is worth over £325,000 as a single person or £650,000 if you are a couple (as both of your Nil Rate Bands are added together should the first spouse leave everything to the second), however with recent changes to the law, this could have increased for some couples to £850,000 this year. Inheritance Tax is 40% of the value of your estate over your Nil Rate Band.
However, if your estate is worth over £2 million, your Nil Rate Band allowance will decrease back down from £850,000 to £650,000, meaning you are £200,000 worse off. Simple financial planning could help to keep this £200,000, and by not planning, as the papers have reported, Bruce may potentially have been worse off!
Further, basing this article on the report that everything was left to Bruce’s wife, she can legally spend the money as she wishes. She could give it all to charity or if she were to die without making a new Will everything would go to her and Bruce’s son with no provision to his other children, grandchildren or great grandchildren. If she were to remarry, and not make a Will, her new husband would inherit everything on her death, and her son, and Bruce’s other five children, will have received no provision.
The majority of this article is conjecture, based on reports from national newspapers, however it is written to highlight the massive pitfalls that can occur if you do not successfully plan for your future and for the future of your family. We are hopeful that Bruce will have taken some financial advice regarding his finances!
Lawson-West has extensive experience of dealing with complex cases like this one. We can arrange meetings for you to receive independent financial advice when writing your Will with us, so that you have the assurance that you are receiving expert guidance that is most suited to your own, unique circumstances.
Please contact us to arrange an appointment on 01858 445 480 / 0116 212 1000.
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