Inheritance tax is charged at 40% on the value of your estate in excess of the nil rate band, which is the portion of your estate which can pass tax free upon your death. Of course, if your estate is valued less than the nil rate band, currently £325,000 (2015/16), then inheritance tax will not be payable. Equally, if you leave your estate, or a proportion of it, to your spouse/civil partner there will also be no inheritance tax. The nil rate band of a surviving spouse/civil partner who inherits assets from his or her spouse/civil partner will be proportionately increased depending on how much is received.
Whilst such basic planning is effective for inheritance tax purposes there is no protection against future residential care home fees and the risk that your partner may remarry. Family trusts offer extra flexibility in your inheritance tax planning making provision for both your spouse/civil partner and children regardless of whether your partner later remarries or moves into residential care.
For anything further, one of our specialists would be delighted to meet you either in our office or in your own home to talk through your requirements and answer any questions. Please contact us at any time.