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Inheritance is still ‘taxing’

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AXA Wealth International has warned that inheritance tax reforms implemented by the Finance Act 2008 only apply to married couples and not their family members.

Families are also advised not to underestimate the importance of inheritance tax planning, which involves reducing the value of a person’s estate to avoid large payments of Inheritance Tax.

Representatives for AXA Wealth International highlight that changes made do not cover all possible inheritance tax scenarios. The implementation of this Act now means that surviving spouses and civil partners could benefit from a nil-rate band allowance of up to £600,000 on inheritance immediately following the death of their partner, an amount which will rise to £700,000 by 2010-11.

However, this transferable nil-rate does not apply to unmarried couples. Kevin Dean, Chief Operating Officer of the wealth management organisation has stated: “Couples who live together – even if they have children together – or family members living in the same property are not covered by this legislation and will not therefore be covered.”

Inheritance Tax advisors are told to study the legislation and remember that individual cases will differ greatly.

Dean also urges people to plan for inheritance tax, particularly when considering the amount of paperwork that needs to be completed after the loss of a loved one. The ‘gift of income’ exception can be used as a way of escaping the tax by giving regular gifts of money to a partner or spouse, on the assumption that it does not reduce the donor’s standard of living. Discounted gift schemes and loan trusts are also recommended as viable alternatives.

Written by Andrew Hodges

November 18, 2009 at 9:54 am

Posted in Comment, LinkedIn

Tagged with , ,

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