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01633 251801

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01495 763333

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Newport Office - 01633 251801

Pontypool Office - 01495 763333

Inheritance tax and trusts

On someone’s death, if the value of the deceased’s estate exceeds an amount known as the “Nil Rate Band” (for the current tax year, equal to £325,000), then the excess will be subject to Inheritance Tax at a flat rate of 40%. That is the basic position, but professional advice is necessary in order to be certain whether Inheritance Tax is likely to be an issue, as there are circumstances where estates of less than the Nil Rate Band will be taxable, and, on the other hand, exemptions and reliefs may mean that estates worth more than the Nil Rate Band do not have to pay any tax.

Where Inheritance Tax is an issue, we can advise on how you can maximise the use of the exemptions and reliefs that will be available to your estate. The ability to mitigate the liability to Inheritance Tax through the careful drafting of your Will should not be underestimated. We offer advice on Will Trusts and the effective use of Business Property Relief and Agricultural Property Relief, among other things. We also advise on the pros and cons of using lifetime trusts for Inheritance Tax planning.

Even if someone dies without having undertaken effective tax planning, we can sometimes reduce the charge to Inheritance Tax by working with the beneficiaries to draft a “Deed of Variation”. This can effectively re-write the Will of the deceased to make full use of the Nil Rate Band and of exemptions and reliefs that may be available. To be effective for tax purposes, the deed must be completed within two years after the death.

Apart from their use in tax planning, trusts can be used for many purposes, such as clarifying the situation where two or more people have interests in a house or other asset, making provision for children or other vulnerable people, or providing a fund to enable various members of a person’s family (or friends) to be assisted financially by trustees, using their discretion, for many years to come.

If you would like to discuss any issues in relation to trusts please contact  Jason Pearce on 01633 251801 or click the following link Contact Us

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