Did you know your family can save money by making better use of tax relief when a spouse or civil partner dies! See below for more information or contact Pickworths Inheritance Tax Specialist Kate McNamee

Everyone is entitled to a Nil Rate Band (NRB). The NRB is the level at which inheritance tax is payable on a deceased persons estate. For 2009/2010 the threshold is £325,000. Assets that pass from one spouse (or civil partner) to another are exempt from IHT so if a person dies and leaves everything they own to their spouse there is no IHT to pay. This means none of the NRB of the person who has died has been used. This unused amount can now be transferred to the surviving spouse and be used in working out the IHT liability on their estate when they die. It works by taking into account the NRB that was unused when the deceased spouse died and uprating the NRB available when the surviving spouse dies by the same proportion. This essentially means you can double the value of your estate which is not subject to IHT – instead of £325,000 being charged at 0% IHT it will be £650,000 (currently using 2009/2010 NRB figure).

This is obviously good news. However with all things good there are some catches. It will not always be the case that the NRB can be doubled on the second death. This will depend on any of the NRB being used on the death of the first spouse. The scheme is not given automatically, it has to be claimed. If people are unaware of this tax concession they will not claim it which then results in higher amounts of IHT being paid by estates. Documentary evidence will need to be provided to support a claim, for example the death certificate and Will of the first spouse to die, any deeds of variation completed on the estate, valuations for the remaining assets of the estate etc. Providing such evidence is not always easy as many estates are administered without the correct valuations being obtained and documents can get lost or destroyed.

The NRB tax relief is a welcome change to the inheritance tax regime but you should obtain legal advice if you are an executor of an estate and unsure how to claim the tax concession or if you are worried generally about IHT on your death: Claiming this tax relief is one of many ways a person can reduce their liability to inheritance tax.

Please contact Kate McNamee for further advice.
 

Planning for the future entails not just making a will and forgetting about it but also the need for review as time and circumstances change.

Perhaps you now have children. Maybe you have amassed property or other assets which didn't exist when your will was made. Perhaps your circumstances have changed; you have married or divorced or your health is now causing you concern.

These are simply examples of changing circumstances that should make us look again at our personal affairs. Pickworths can help you think through all your options with regard to:

• making or reviewing your will
• lasting power of attorney
• protecting your assets as you get older
• gifts of property
• tax and tax planning

Regular review with the advice of a professional is the only sure way to plan for the future.

Contact Kate McNamee, Ian Tottman or June Yap