Passing on your wealth: A guide to inheritance tax and estate planning

A legally valid Will is the cornerstone of any estate plan. It is the only way to guarantee your assets are distributed exactly as you wish. Dying without a Will (known as dying intestate) means the law will decide who inherits your estate, which may not align with your intentions and can cause unnecessary complications for your family.

A Will allows you to:

• Clearly name your beneficiaries.
• Appoint executors to manage your estate.
• Set out funeral wishes.
• Appoint legal guardians for any minor children.

Gifting money or assets during your lifetime can be a rewarding and tax-efficient way to reduce the value of your estate. HMRC provides several allowances for gifting, including:

Annual exemption: You can gift up to £3,000 each tax year without it being added to the value of your estate.

Small gift allowance: You can give as many gifts of up to £250 per person as you want each tax year, as long as you haven’t used another allowance on the same person.

Gifts from surplus income: Regular payments made from your excess income can also be exempt from IHT, provided they don't affect your standard of living. Keeping detailed records is key.

Larger gifts can also be made, but they may be subject to IHT if you pass away within seven years. This is a complex area, so seeking professional guidance is crucial before making significant gifts.