Leaving Behind an Inheritance, Not a Tax Bombshell

Although acts of gratuity are often greatly appreciated, sometimes people dread them for their accompanying consequences. Indeed, while death or lifetime gifts may leave you with a large legacy, it may also cost you even larger amounts in terms of taxes and transfer fees. Whereas this fact is clear to many, only a few realise how insurance can lessen, if not entirely avoid, the unfavourable expenses that go with an inheritance.

Some heirs admit that they have never really given this as much thought as they do their credit card bills until the day that Inland Revenue comes knocking at their door to collect shocking sums. This lack of understanding of the implications of receiving a gratuitous present during or after the life of a donor can be a bit worrying, considering how some people could be transferring a bombshell instead of a legacy to the people they love.

Financial advisers claim that you can make use of annual allowances set to cover for gifts made for the year. If you did not use up any of it, you can bring forward the unused portion to the following year, thus increasing the maximum amount that you can donate tax free. Another way is to hand out small presents each year, which is very useful especially if you are planning to give money for someone’s birthday or during Christmas.

However, aside from taking advantage of existing breaks, exemptions, and allowances, inheritance tax insurance for lifetime gifts will help minimise the financial burden on the recipients. Unlike a term policy (which is fixed to a specified period), taking out a whole-of-life assurance cover will provide a guaranteed payment (the assured sum), regardless of when the donor dies.

What is even more advantageous about such policies is their duration, which is only good for seven years. Consequently, they are not priced so expensively as to lessen one’s estate considerably. No doubt, despite that rising prices of property have made inheritance taxes more threatening, the liabilities may be managed simply and effectively with the help of insurance. Have you given these things some thought? If you haven’t yet, it is high time that you do.