|
|
Helpful Advice About Inheritance Tax
Tax paid by individuals or families who have inherited something from a dead person, is referred to as inheritance tax. The heirs pay it following the death of a specific person who has passed on his property, or estate to them.
A common misconception is that inheritance tax, and estate tax are the same. However, this is not so, as the inheritance tax is not levied on the entire estate; it is only to be paid on the property that is passed on as inheritance. Still, in some countries, such as the UK, the two are not very distinct from each other. Inheritance tax is also known as Death Duty.
Inheritance tax concerns valuable things, which are part of an inheritance, such as property, jewellery, collectable items, and even intangible assets, like investments and life insurance. As far as the UK is concerned, this tax is levied on inheritances worth 325,000 or higher. The instant surviving family becomes responsible for the inheritance tax, in case of a death, since they become owners of the property. In addition, a dying person can refer to the beneficiary in his/her will; the beneficiary then attains responsibility.
A person is exempt from paying inheritance tax in some instances. If a UK citizen has lived outside the country for more than three years during a twenty-year tax period, then he is not liable for paying this tax. In addition, if the assets are overseas, there is no tax charged on them.
In case an individual handed down a property to someone, a minimum of seven years prior to his death, then there is no tax levied on that property. Moreover, if a property or assets are relocated to spouses or children, they are exempt from taxes. In addition, there is no inheritance tax on life insurance policies meant for children.
People usually criticise inheritance tax, and are against it, because they believe that it is not fair to put such a burden on the family of the deceased, who has already suffered a loss. The amount of tax can be very high, sometimes even being around forty to fifty percent of the whole asset value. Hence, implementation of inheritance tax planning to decrease this burden is very important.
Inheritance tax can be reduced through various ways. Writing a will and specifying who your heirs are is important; no confusion exists. It is also a good option to transfer your estate into life insurance funds, or trusts, on which there is no tax application. Thus, the spouse in addition to the further generations can reap advantage from your estate. They will receive consistent income with the burden of the tax absent, as they will not own the entire estate.
It might also be a good idea to engage your money in investments that are charged with a lower tax rate. Utilise the annual allowances granted to you with gifts. Regular gifts made from your estate are exempted from taxes, thus you can help your family without the trouble, and hassle of inheritance tax.
|
 |
Please Rate: |
|
Rating: |
 Processing ... |
(Average: Not rated) |
| Views: | 36 | |
|
| More Articles from Insurance | | |
| Top Articles in Insurance | | |
|
