When speaking to potential clients, I find the topic of the use of trusts in relation to
Inheritance Tax (IHT) Planning coming into the conversation with some regularity.
Given that the individual inheritance tax threshold is currently set at £325,000, with a
further £175,000 potentially available if your estate includes your main home, an individual
could potentially pass on £0.5m before IHT is even an issue.
So why do trusts keep coming up in the conversation…
Well, it’s rarely me bringing it up. Actually, it’s normally the clients who raise it.
I think that probably it’s because people resent the idea of ‘The Taxman’ taking anything
which they have worked so hard for when they finally leave it to their family or friends after
their death.
Now I’m not saying that there isn’t a place for the use of trusts in Inheritance Tax Planning,
it’s just that they’re not a ‘Silver Bullet’.
In some cases, a Trust arrangement could be exactly what is needed but in other cases there
may be other ways in which you can avoid a future IHT liability.
Whatever your concern about Inheritance Tax, make sure to speak to someone you trust to
sooner rather than later as it is far easier (and cheaper) to plan properly than to react later
in the day.
https://www.moneyadviceservice.org.uk/en/articles/using-a-trust-to-cut-your-inheritance-tax
https://www.gov.uk/inheritance-tax
https://www.gov.uk/inheritance-tax/passing-on-home
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The Financial Conduct Authority do not regulate trusts and inheritance tax planning.