The idea of planning for the effective management of your property can appear quite complex: you will want to provide for your family but you may be unsure of what this process involves. Not only that, you may not have considered what tax charges may be due on your estate, in attempting to provide for future generations.
Estate Planning Legal Advice
At J Watson & Scott, our expert Private Client lawyers can help guide you through this complicated area of the law. We will work in partnership with you to organise the management of your estate. Here we provide a breakdown of what Estate Planning involves, and how you could benefit from it.
What is Estate Planning?
Estate planning essentially involves minimising the liabilities of your estate, such as Inheritance Tax, especially if you are considering passing on any aspect of that estate to members of your family.
In deciding what property to pass on to your family, most people do not concern themselves with taxation. This can be a mistake. The property that you leave your family e.g. house, investments or personal possessions will have a financial value. As a result it will have to be subject to Inheritance Tax before it can be passed on to your family.
The value of your estate will determine how much Inheritance Tax will have to be paid, and the rate of Inheritance Tax does change from time to time as does the allowable thresholds. The important point about Estate Planning is that you will be able to use the tools that the law provides to minimise your estate’s liabilities.
What should I think about?
There are many ways you can effectively manage your estate, and reduce your liabilities:
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Pass on the property now
Inheritance Tax is only due on property that is to be inherited. If you pass on property to your family now, it will not be subject to this tax. The important point is that you must pass on the property now, and no longer have any benefit in it. To do this however may have another tax implication which would require to be investigated.
Furthermore you may hope to leave money for a Charity in the future, but be concerned about Inheritance Tax. Any gifts of money to charities or museums will be exempt from Inheritance Tax.
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Make use of tax allowances
The rules regarding Inheritance Tax will only apply if the value of your property is above a certain threshold. Everyone in the UK is entitled to an allowance, the ‘nil-rate band’, and if the value of your estate falls below that threshold Inheritance Tax will not need to be paid on it. Furthermore, if you are married and you do not use your entire ‘nil-rate band’, this can be passed on to your spouse or partner, and further reduce the Inheritance Tax that may be due.
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Put the property into a Trust
An alternative way to manage your estate is to put a portion of it into special care in the form of a Trust. Property that is placed into a Trust is either to be used for a specific purpose, e.g. to pay for grandchildren’s education, or for more general purposes. The important point is that property placed into a Trust can be excluded from the value of your estate in terms of calculating Inheritance Tax.
Many people do not consider the idea of Estate Planning because they believe that it is reserved for wealthy individuals that hold large investments or otherwise. This is simply not true. Everyone can benefit from effectively managing their estate, regardless as to how large or small it is.
Contact our Estate Planning Lawyers in Scotland
At J Watson Scott & Co Solicitors Hamilton our specialist Private Client lawyers are very familiar with helping clients manage their estate effectively. We will be able to advise you on how to ensure that your affairs are organised properly, and that your possessions are distributed in an efficient and organised manner amongst your family. Our Hamilton office is convenient to Motherwell, Larkhall and areas beyond. If you have any questions regarding Estate Planning contact us now.
