16:29 27 February 2013
If there is one commonality that exists across the globe it’s this: Everybody hates taxes (and I would imagine that inheritance taxes are at the top of that list). This hasn’t changed since the days of the Bible when people faced imprisonment or even death for their failure to render unto Caesar that which was Caesars. Times haven’t changed much, right?
Well, as if paying taxes alone wasn’t bad enough, the concept of paying inheritance tax is like the most dreaded two-for-one deal you could ever imagine. Simply put, an inheritance tax is taxes due on money left behind when a person dies. Taxes are not only levied against money, but also all property and possessions as well.
So, not only are you dealing with the loss of a relative or loved one, you are now burdened with a potentially enormous tax bill to boot.
So here’s the good news (as good as it gets anyway). The inheritance tax does not take effect until the inheritance worth reaches £325,000, and it excludes any debts owed and expenses such as funeral cost for the deceased. Although little consolation during such a time of difficulty, it is a detail that will save the inheritor a considerable amount of money.
So here are three simple ways to reduce or minimize your inheritance tax ahead of time:
1.If you’re leaving a gift to a spouse or recognized civil partner, the inheritance can be passed on without penalty, and no IHT has to be paid.
2.Certain gifts and charitable donations are considered non-taxable and can be passed on without governmental taxation.
3.Set up a trust for someone other than your spouse of children. For example, set up a college fund for your favourite nephew. No inheritance tax is required.
Knowing the rules and how they are applied is half the battle when dealing with inheritance taxes.
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