Ultimate Wills for Couples with Inheritance Tax Concerns

In the last article, I explained how flexible tax planning in Wills can assist married couples who are concerned about Inheritance Tax.

This article goes further, and explains how we can prepare Wills for married couples with considerable assets who are definitely concerned about Inheritance Tax, but are also concerned about the surviving spouse remarrying, or the divorce or bankruptcy of any of their children. In other words, they want Wills that protect assets for the next generation.

With regard to tax, there is always the problem of how to tackle this issue. If you leave much of what you own to your children or other members of your family on your death, not only is it quite likely that it will give rise to an Inheritance Tax bill, but also it may leave your surviving spouse in financial difficulties.

The flexible tax planning in the Wills I described in the last video will go some way to solving this problem; it will generally avoid tax being payable when the first of you dies, and for many couples this may be sufficient.

However, we can explain to you how it is possible to have Wills drawn up which go a step further. They are not only drawn up to avoid any inheritance tax being payable on first death; but, in certain circumstances for those with larger estates, they can reduce or even eliminate the potential inheritance tax liability on second death.

These Wills can be drafted so that the surviving spouse is able to continue to live in the matrimonial home, even if it had been owned by the first spouse to die.

And, in addition, they can receive the interest and income from all savings and assets owned by their late spouse.

If they should have greater financial needs, the Trustees can transfer assets or any lump sums to them to cover those needs.

However, the surviving spouse will not own outright any of the assets which formerly belonged to their spouse – not even those on which they’re receiving the income. So, the value of these assets would be disregarded by a local authority in a care fee assessment, and if they should re-marry at any time in the future the assets won’t pass to their new husband or wife.

If at any point after first death it is calculated that the surviving spouse has no need for all of the income produced – perhaps because they have downsized or have gone into care – then the Trustees can transfer these assets to the children or beneficiaries of the first spouse to die. If
the surviving spouse is still alive seven years later those assets will have passed to the children free of inheritance tax. Just think about that. The potential for a very large saving in death taxes, completely legitimate; and it’s not an artificial scheme, so is accepted by H.M. Revenue & Customs.

As will be appreciated, these kinds of Wills are rather complex to prepare and need careful explanation, but are perhaps the most flexible Wills which can be drafted, and are now more and more frequently becoming the favoured solution in and around London.

I’m sure you haven’t worked hard all through your life just to hand over your hard-earned savings to the Revenue or to the children of your spouse’s new partner. Get in touch with us, and we’ll be happy to explain further.

Download our free “11 Inheritance Tax Secrets the Revenue would rather you didn’t know” E booklet by completing the form below!


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