» Case Studies
|
Case 1 : No Inheritance Tax Planning
|
||
|
Mr Smith’s Estate
£335,000 |
Mrs Smith’s Estate
£265,000 |
|
|
Mr Smith passes all of his estate to his wife free from IHT, but this leaves her with an estate of £600,000, which is well above the Nil Rate Band.
|
Mr Smith £335,000 Mrs Smith £265,000 Total Estate = £600,000 |
|
|
On Mrs Smith’s death her estate will pass to her beneficiaries. Inheritance Tax will be paid on the £300,000.
|
TAX DUE @ 40%
£120.000 |
|
|
Case 2 : With inheritance Tax Planning
|
||
|
Mr Smith’s Estate
£335,000 |
Mrs Smith’s Estate
£265,000 |
|
|
Mr Smith leaves his wife £35,000, bringing the value of her Estate up to the maximum allowable tax-free amount.
|
Mr Smith £35,000 Mrs Smith £265,000 Total Estate = £300,000 |
|
|
Mr Smith leaves the remaining £300,000 in trust.
|
Nil Rate Band
£300,000 |
|
|
TAX DUE @ 40%
NIL |
TAX DUE @ 40%
NIL |
|
|
As we use a discretionary trust with the spouse named as the trustee, in the example above Mrs Smith will have access to the £275,000 during her lifetime, for loan purposes. All that is required is the consent of her co-trustees, and for this reason we recommend using a close friend or relative or a professioinal as ‘soft’ trustees so that the survivor’s instructions will be carried out, without question.
|
||
