There is a wonderful definition for Inheritance tax that says it’s a tax paid by people who mistrust the Chancellor slightly less than they mistrust their own family.
It is all about trust so the question is, how do you build trust? When it comes to Estate Planning there are three of guiding principles.
Look after number one first then;
start small and;
Anyone concerned about estate planning has already worked out that when they ‘check out’ the Chancellor will be first in line to collect his share. The larger the estate the bigger his pay day.
Nobody has to pay inheritance tax, but to avoid the trap you do have to start early. ‘Old money’ teach their children this from birth – you will inherit the family fortune one day, when you do, do your best to make it grow, look after your siblings but, whatever you do, pass it on seven years before you die. Those encountering IHT for the first time have yet to learn this lesson.
Start by knowing exactly how much you have and how much you need to look after yourself and your spouse – to the latter add a buffer. Work out what remains – this is what needs attention. Next work out who you want to benefit – and when!
Start small – use the annual giving allowances to introduce the idea.
Next pass on a chunk of money to be invested in premium bonds. If these are sold without your agreement you have your answer. Then look at their debts – helping them pay down a mortgage makes a huge difference to their lives.
By starting early you are educating the next generation about ‘family money’ while starting small and building up you build trust as you go. Old money has been doing this for years – now its your turn!