Most married couples who make wills simply leave everything to each other. However, this is not always the best thing to do because it may mean that long term beneficiaries end up paying far more Inheritance Tax than is necessary.
If your estate (your savings, house, possessions, insurance company pay-outs etc) is worth over £300,000 then Inheritance Tax is charged at a rate of 40% on any amount above this figure. That may sound a lot of money, but the value of your assets may well take you to a figure in excess of this.
Many people exceed the current Inheritance Tax threshold of £300,000 but would not have done so a few years ago simply due to significant increases in domestic property prices in recent years.
If a husband and wife make Wills leaving their estates to each other, there is no tax payable on their estates when the first one dies. However, a tax liability will arise when the second partner dies. Often a large Inheritance Tax billl is inevitable when the estate is finally passed to the children. This means that your family and loved ones could lose a sizeable part of their inheritance.
Proper planning using Discretionary Will Trusts can reduce or even remove Inheritance Tax liability.
Please click here to arrange to talk to MFS who will be able to provide practical solutions to your complex tax problems.