Earlier this year it was reported that Sir Bruce Forsyth had left his £17 million fortune to his wife Wilnelia to avoid inheritance tax.
Inheritance tax is a tax on the estate (property, money and possessions) of someone who has died.
It appears that Sir Bruce had taken advantage of an estate planning strategy which means that an individual can leave their estate to their spouse or civil partner and it will be free of inheritance tax (IHT)- this is called ‘spousal exemption’.
The current threshold at which your estate becomes liable for inheritance tax is £325,000 and in April 2017 an additional allowance, the residential nil rate band was introduced. This applies where a house is being left to a person’s direct descendants – children (including foster, adopted or step-children) and grandchildren, which equates to an additional £175,000 by 2020 which can be claimed against the value of the house.
Inheritance Tax (IHT) and Estate Planning is essential to limit tax payable or to ensure that any unused additional threshold is transferred. You can limit the tax payable by giving away assets, setting up a trust or changing your will. There are complicated rules, capital gains tax and various reliefs that need to be considered to ensure that you are protecting your financial beneficiaries and limiting the IHT that they may have to pay on your estate.
In the case of Wilnelia Forsyth, astute planning will be essential to mitigate the inheritance tax that may have to subsequently be paid on her death. It is never too early to plan ahead!
For more information on how BlackBear Financial Group Ltd can help you with your personal IHT planning, contact us on 0151 305 2305 or email us at firstname.lastname@example.org.