- By Steven Hayes
- Published 11/1/2012
Although thinking about your own death may seem like a morbid affair, however, it is necessary that you have a financial plan before you die. Your estate will be taxable after you die. The estate includes your property, money, savings, possessions and investments. The assets which you have turned into trust or have given as a gift will also come into consideration.
If you are under impression that only the rich and famous pay the inheritance tax, you are mistaken. To avoid Inheritance Tax you are required to hire a competent solicitor. Only a solicitor experienced in handling such types of cases can be able to provide you proper solution.
You can avoid this tax by proper planning. However, first you need to learn who pays the tax to be able to avoid it. The executor pays the inheritance tax from the fund gathered from the estate. Trustees pay the inheritance tax on the trusts. This is a great way of taking care of the assets. Trustees maintain the trust. However, there is a threshold of certain amount, below which you will not have to pay the inheritance tax.
Those who have been chosen to execute the estate are required to calculate whether there is need to pay for this tax. The calculation may require the assistance of a professional solicitor with the experience of handling probate distribution. You can add up the liquidate value of the entire estate along with all the presents made in seven years before the person’s demise. You are required to deduct the bills and the debts to find the exact amount.
If you are planning to avoid paying the tax, you are required to act quickly. There is a deadline of paying this tax. You are required to take action within six months of the person’s death. The tax can be paid in instalment too. However, the amount of instalment depends on several factors. You need to seek assistance of a professional if you want to find this out.
In case you fail to pay the tax, you will be charged interest on the outstanding amount. This interest will be applicable regardless of your reasons for failing to pay the tax. The interest will be applicable even if you pay by annual interest.
According to the UK probate law, you are required to pay the inheritance tax within twelve months of the person’s death. If you fail to pay the accurate amount, you may have to pay penalty along with the interest.
For those who are looking for a way out of this tax paying scheme, there are various ways of avoiding it. You need to consult a solicitor who has the experience and qualification. The solicitor is the best one to help you in this inheritance tax planning.
You can reduce the asset by gifting some of it to your children or grandchildren. However, you are required to stay alive after gifting the asset and you will be able to avoid the tax. Along with this you can set up a trust for the disable children. These types of trusts are not taxable. Setting up charitable trusts are also a great way of avoiding this tax.
Author Bio: Steven Hayes is a professional consultant who offers advice on a wide variety of issues. He provides tips and suggestions about the ways you can avoid Inheritance Tax.
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