Inheritance tax is paid on an estate when somebody dies.  Only estates of value over the threshold are subject to inheritance tax. In 2014-2015, the threshold was set at £325,000.  If an estate is worth over £325,000, the first £325,000 of the inheritance is tax-free, inheritance tax is charged at 40% on anything above the threshold.


Inheritance tax is also sometimes payable before you die on trusts or gifts. 

Increased threshold for married couples and civil partners
Since October 2007, married couples and registered civil partners can effectively increase the threshold on their estate when the second partner dies – to as much as £650,000 in 2014-15.  Their executors or personal representatives must transfer the first spouse or civil partner’s unused inheritance tax threshold or ‘nil rate band’ to the second spouse or civil partner when they die.

Will Trusts
These were often used to remove the Nil rate band (£325,000 2014/15) from the surviving spouse's estate - however since the shared nil rate bands between spouses came into effect most circumstances where this would have been an advantage have gone, as a will trust could only effect up to the nil rate band as any excess amount would not benefit from the spousal zero rate and would be taxed at 40% for IHT.  Will trusts may still be effective where there are remarriages and children from previous marriages or where long term care costs are a concern and a will trust removes funds from a spousal estate.

Who is responsible for paying inheritance tax?
Inheritance tax is payable by different people in different circumstances.Typically, the executor or personal representative pay it using funds from the deceased’s estate.

Our Independent Financial Advisers are usually happy to meet at our clients' preferred location and time and to have detailed initial discussions with no obligation.

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