It should be remembered that sensible inheritance tax planning for future generations can make a massive difference over time enabling the preservation of family wealth.
£1m inheritance tax allowance per couple?
The recent Budgets finally made good on the long standing promise to increase the inheritance tax allowances to £500,000 for an individual or to £1m for a couple.
These allowances will however be phased in from April 2017 and will come fully into force from April 2020.
All good news? Yes and no.
As always, there are a number of caveats and conditions that may catch some people out. For example the increased allowances only apply to people whose total estate, on death, is worth less than £2m.
If an estate is worth more than £2m then the additional allowances are reduced by £1 for every £2 over the threshold such that if the estate is worth £2.75m, on death, then clients will only get the old allowance of £650,000 per couple.
Another thing that wasn’t widely publicised is that when calculating whether you breach the £2m limit you must take into account all assets, including assets that are already exempt from inheritance tax such as shares in a family trading company.
In summary don’t take for granted you will benefit from the new reliefs in full.
Sensible inheritance tax planning for future generations can make a massive difference over time enabling the preservation of family wealth.