How may I reduce IHT. liability.

[Brengun]

I own a house valued at £250,000, shares value £75,000 and have £30,000 cash and near cash,no life insurance. My wife also has shares valued at £60,000. Any advice appreciated.

[Nigel Lord]

Brengun

You value your joint estate at £415,000.

If you equalised your estate and ensured that any property was held as tenants in common rather than as joint tenants, you could protect against any Inheritance Tax (IHT) liability by preparing mirror wills containing will trust clauses to ensure that you both maximised your IHT 'nil rate bands' (£255,000).

The cost of such an exercise should be somewhat less than £1,000 and would eliminate your current IHT exposure of £44,000 as well as any tax on an increase in the value of your estate up to £510,000.

Please contact me if you wish to implement the strategy.

Nigel Lord
Lord Associates
Taxation & Business Consultants
Caxton House
Old Station Road
Loughton
Essex, IG10 4PE
020 8418 9101 & 07769 931852
mail@lordassociates.co.uk

[Taxbar]

Dear Brengun,

Always make sure that any wills are drafted by a qualified Lawyer.

The actual wills you require are NIL BAND WILL TRUSTS not simple MIRROR WILLS and they usually are best drafted by a Lawyer who is also a Tax specialist.

These give you the chance to use your NIL BAND of £255K on the first of you and your wife to die, any sums over that amount being left to the surviving Spouse. It also assumes you haven't made any gifts in the previous 7 years that would fall into the NIL BAND.

you of course need to have children or other beneficiaries to leave your estate to.

Your wife can also benefit from the NIL BAND TRUST if she needs the money, whilst it should not fall into her estate if done correctly and so the NIL BAND Allowance is doubled to £510K.

I hope that makes the issue clearer and of course both you and your wife need to agree to this strategy.

Daniel Feingold
Barrister NP
Strategic Tax Planning
E-mail: sedrate@easynet.co.uk
Tel: 0161 720 7244

[Nigel Lord]

Just to put the record straight, our firm implements this strategy several times each month and obviously we would provide a comprehensive review of your circumstatnces prior to implementing any proposals. We always use full qualified lawyers who specialise in estate planning or the client's family solicitor if appropriate.

I do not think that we should trouble ourselves about the terminology. Over the last 14 years, or so, I have heard the will trusts described in many different ways. We are still talking about the same animal.

Nigel Lord
mail@lordassociates.co.uk