Careful wealth management ‘can help with inheritance tax burden’

Posted 11/04/2011

Employing careful wealth management techniques could help people to reduce the inheritance tax (IHT) burden they leave behind.

Country Life magazine recommended that individuals should know the true value of all their property, savings, investments and possessions to work out how much IHT would be charged, then take action to reduce it.

“You can’t be taxed on money that was never yours, so ensure that as much as possible is outside your estate – especially any life insurance plans,” the publication commented.

It particularly highlighted trusts as being useful for the security of a surviving spouse while also ensuring children are provided for, but said it is wise to seek specialist advice when setting one up.

Finally, it suggested making use of the annual gift allowance to give away up to £3,000 each tax year, provided the donor lives for seven years afterwards.

Anything passed on to a spouse is tax-free, but legacies between cohabiting couples are not.

The Telegraph’s financial expert Beverley Lavin also recently recommended organising finances carefully to prevent relatives losing out after a death.