When we start getting older, we want to be able to pass on our legacy to the people we love. However, there are a lot of predators out there who also want to get their hands on your money, including the government. The death tax in the UK has recently been changed because of the degree of public uproar over having to pay 40% tax on everything that is left behind. And that’s 40% tax on top of any income taxes paid.
So what can we do to make sure that our children get most of the money that we’ve spent all our lives working to get?
Draw Up A Will
If you don’t have a will, it’s the state who decides who gets what from your inheritance. Without a will, the state will usually give a chunk of money to your spouse. And then divide up any remaining money between your children equally.
But it may be more tax efficient if you give some of your money to your grandchildren in your will. This way you can reduce the amount you pay out to any individual person and avoid breaking the thresholds to higher taxes.
Transfer Home Ownership
Transferring who owns your home long before you die can exempt you from paying taxes. But you need to make sure that you do it sufficiently in advance.
Include Everything In The Trust
Putting all your assets into a trust means that you can avoid going through probate. Trusts are like wills, but difference is that with a trust you usually avoid expenses like probate that you get with wills.
If you opt for a revocable trust, you’ll still be able to dip in and out of any money that may be in the trust fund. Don’t go for an irrevocable trust, because the assets will only be released when you die. Also, it’s not a good idea to be a joint holder of a trust with your children. In most states this can actually increase the amount of tax that they pay.
Trusts, however, can be problematic. If you think you may have been abused by your trust, you can learn more at Aldavlaw.com. You may also consult an estate planning attorney, probate attorney or even the most reliable trust management services to avoid this in the future.
Consider The Valuation Date On The Home
In most circumstances, the executor of the estate will value the house on the date of the death. However, if you are liable to pay taxes on the property, you may sell the house within six months of the date of death. If you can get an alternative valuation, you may be able to reduce the gross amount of the estate tax. You may also be able to increase the inheritance to beneficiaries. Find out what tax deductions are available to you at turbotax.intuit.com.
Give To Charity
To avoid paying money to the tax man, you might also want to consider giving some money away to people in need or a noble cause. This may sound counterintuitive, but it does, at least, give you some control over who gets the money when you’re gone.
Each year you can give a certain amount of money in gifts before you pay gift taxes, so use this and get your money to the right people.