Ways to Decrease Inheritance Tax

Nowadays, any property holder is obliged to pay a minimum of 40 percent, the overall value of the estate. Luckily, there are ways to lessen this amount for your heirs, and here are some of them:

1. Make a gift of your assets
Basically, this is a process wherein you transfer the title of your property while you are still alive instead of it being inherited through death. For example, you can gift up to 12,000 pounds for your children in one year. The benefit of this is it reduces the amount of inheritance tax your heirs have to pay. Of course, one of the requirements of this procedure is that you have to be willing and capable of gifting. This means that you were of sound mind and body when you made the decision.

2. Get married
Believe it or not, inheritance tax is no longer payable when an estate is passed between husband and wife. In addition, the unused balance can be transferred to the spouse after death.

3. Live for seven years after giving the gift
If you have decided to gift your assets, you can make additional tax free arrangements known as PETs (Potentially Exempt Transfers). However, this can only be accomplished if you remain alive seven years after you have made the gift. For instance, if you pass away and the value of the transferred properties is more than the band threshold, then your heir can apply for taper relief, wherein the tax is slightly reduced. Of course, the overall amount would still depend on the value of the property. As such, it helps to stay fit and strong during the time of transfer. Having a health insurance plan also helps.

4. Apply for gift inter vivos insurance
In case you pass away while transferring the title of property, you can further lessen your heirs’ inheritance tax through this financial coverage. Though it may not completely shoulder the remaining balance, but at least it can help reduce the bill to a more reasonable amount. Of course, in order to know how much money you need to invest, you need to study not only the current value of the property, but also try to estimate its value for the years to come.

If you need help finalising all other property details, you should seek the aid of real estate and legal advisers.