INHERITANCE TAX PART 2

Will planning
First and foremost, you need to decide who should benefit from your estate - and then make a will.  This will ensure that your intentions are clear and making a will can also help avoid Inheritance Tax by utilising your nil rate band.
Using the nil rate band to good effect
The law of Inheritance Tax allows an individual to transfer as much as they like to a UK domiciled spouse, without liability, and then up to £275,000 to other people before any tax is levied. If this amount was left to your children, for example, you would save £110,000 in tax (£275,000 @ 40%).
Exempt transfers
Any gifts or bequests in favour of "exempt" beneficiaries are free of Inheritance Tax. For example, a gift in favour of a surviving spouse or a charity is exempt from tax. However, if the surviving spouse is named as beneficiary the Inheritance Tax problem is simply deferred until his or her subsequent death.
Lifetime Gifts
As mentioned previously, the simplest method of reducing the value of a taxable estate is to give away surplus cash and assets, then to survive for a period of seven years.
Unfortunately, few people can afford the luxury of parting with assets of significant value, and others are simply unwilling to relinquish control during their lifetime. The answer could be a trust arrangement.
Use of trusts
There are a number of trusts, which can be used, the suitability depending on the precise requirements of the individual and the tax consequences of the trust. Some of the reasons for establishing a lifetime trust include:
* the ability to make a gift of assets and maintain control of who benefits
* providing for miner children
* to avoid or reduce Inheritance Tax and Income Tax
* a means of avoiding Probate delays
* providing a flexible environment for the future
Most lifetime gifts into trusts are Potentially Exempt Transfers (see above).   However, many people establish discretionary trusts as a prudent method of avoiding Inheritance Tax.  Gifts into these trusts are immediately chargeable - as far as they exceed £275,000 - but at a reduced tax rate.
Life assurance
This is an established and effective method of meeting an Inheritance Tax liability, whereby a life assurance policy is effected to ensure that capital is available at death to meet the Inheritance Tax bill. Policies are normally written under a suitable trust arrangement. It is also possible to buy an annuity to fund the premiums due.    You should be aware that full medical evidence will be required for any life assurance arrangement and if you are not in good health for your age, that this may not be a viable proposition.

For more information about Inheritance Tax planning, please contact Myers Financial Management on 01263 821147 or by e-mail on enquiries@myers-group.co.uk   www.myers-group.co.uk
This article is based on Myers Financial Management's understanding of current law and Inland Revenue practice, which may be subject to future variation.  It is only relevant in respect of Inheritance Tax as it affects an individual (and their spouse) who have a UK domicile.  It is recommended that any individual who has or may have an Inheritance Tax liability should first consult their financial adviser before taking any course of action.
Myers Financial Management is authorised and regulated by the Financial Services Authority

NORTH NORFOLK CONSERVATIVE ASSOCIATION

Sheringham Branch of the North Norfolk Conservative Association held their AGM at the Burlington Hotel this week.  The Branch Chairman, Madeleine Ashcroft told the members that the year had been very successful and that membership was beginning to increase, although there is always room for more of course!!   She felt that having one politically inspired event and one of a non-political nature actually gave a balance to events.  Danny Rowe and Hugh Mullins were thanked for their work on the committee as they move on to other fields.  Kay Milner was elected to serve on the committee.  Peter Talbot C.B.E., Association Chairman praised the effort of the Branch and encouraged members with his view of the future for the party.  He was pleased that Sheringham already has people preparing to stand for the District Elections next year, as this will be a busy time for us all. Members were reminded that the Annual Association Fair would take place this year at Beeston Hall School and Sheringham should be prepared to play a vital part in the activities.  A lively political discussion ensued.  The meeting ended, members withdrew to the bar for fortification.