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Inheritance Tax - A Concise Guide
By Benedict Rohan

With ever-increasing property prices, more and more people’s assets are now worth more than the inheritance tax threshold of £285,000, which has never been increased in proportion to the recent property boom. With a rate of 40% inheritance tax on any assets above the £285,000 threshold in the estate, this can really put a dent in what your heirs receive from your estate.

Inheritance tax is levied upon a person’s death. Once all of their assets have been totaled up, anything over the threshold will have to be paid by the executors of their will.

It’s becoming increasingly difficult to avoid inheritance tax, but there are some strategies that you can put in place to help minimize its impact. Inheritance tax is an extremely complicated subject, though, so you should never attempt to make any plans yourself without good professional advice, otherwise you may end up making your tax situation worse.

Make a will

First, make a will. This in itself won’t help you to avoid inheritance tax, but it will make your intentions clear so that any inheritance tax planning you have put in place will come into effect.

Transfers between spouses

If you’re married or in a civil partnership, both of you should attempt to use your full threshold separately.

Husbands and wives or civil partners can transfer assets (such as property) to each other without incurring inheritance tax. However, this will increase the value of the surviving partner’s estate, which will be subject to tax when they die. If this brings it above the threshold, inheritance tax will then be due. Another possibility is to bequeath your estate to someone other than your spouse, for example your children. However, this has its own complications and is not always appropriate.

Gifts

If you want to give something away during your lifetime but still keep using it, the Inland Revenue may still consider it part of your estate for tax purposes when you die. Such gifts are regulated under the ‘inheritance gift with reservation’ rules. For example, if you sold your house to your children you may have to pay full market rent. Also, they could be liable to pay capital gains tax on it if it is a second property for them.

However, within certain guidelines you can give away some assets and gifts to friends and relatives, known as ‘potentially exempt transfers’. These will not be subject to inheritance tax as long as they are given at least seven years before you die. If you die within seven years of giving a gift, tax will have to be paid on a sliding scale.

Some gifts are completely exempt from the inheritance tax rules. You can gift up to £3,000 in any tax year, plus up to £3,000 in unused allowance from the previous year. Unused allowance can only be carried forward from one previous year. There’s also an allowance for wedding gifts to children (up to £5,000 for each child) and grandchildren (up to £2,500 per grandchild) and other friends and relatives (up to £1,000). A small gift allowance of £250 per recipient per year is also permitted.

Some gifts, however, may be subject to capital gains tax if any income is made from them, e.g. if they are invested in stocks and shares.

Gifts to charities

Gifts to registered charities and political parties are always exempt from inheritance tax.

Trust funds

In some circumstances, it’s possible to set up a trust fund. However, the rules regarding trust funds were changed in the 2006 budget to restrict inheritance tax avoidance in this way so it’s not always a feasible option. Most money held in trust for children will be subject to inheritance tax after they reach 18 unless they are disabled.

Life policies

Certain types of life policy are exempt from your estate under inheritance tax rules. So, it may be possible to pay regular sums into such a policy, either towards a trust or towards your children, in the hope that it will make enough money to pay some or all of the inheritance tax bill at the same time as reducing the size of your taxable estate.

Author: Benedict Rohan Website: www.mortgagenation.co.uk Benedict Rohan works as a freelance finance writer. Commercial Mortgage, Homeowner Loans, Remortgages

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What is Unclaimed Inheritance? Am I Owed Any?

By Nicole Anderson

Are you aware there is over $35 BILLION in unclaimed money in the United States and some of it is unclaimed inheritance. This article will tell you what unclaimed inheritance is and how to find out if you have inheritance that is owed to you!

Inheritance can become an unclaimed asset when there is a death and the heirs cannot be located.

If a person dies and you are the heir entitled to some or all of their estate and the institution holding the money does not know how to contact you or that you are the entitled heir the money becomes unclaimed money.

Unclaimed inheritance can include:

Bank accounts
Savings Accounts
Life Insurance Payments
Safety Deposit Boxes
Social Security checks
Old Pay Checks
Stocks, Bonds and Dividends
…the list goes on and on….

If the institution holding they cannot reach you through the contact information available on the account they hold the money for 2-3 years in most states. After that time the money is turned over to the state where the institution is or the state where the last known address is. Some accounts are turned over to the federal government.

This money sits in the state or federal unclaimed money pools until the rightful owner claims it. The problem is the account owners of unclaimed inheritance accounts usually don’t know the money even exists so the money just sits and sits and sits…

The unclaimed money pool in the US has grown to a staggering $35 BILLION owed to millions of Americans.

You can find this money by searching for it.

The best way to search for unclaimed inheritance is to search an “all in one” database. Since it is an inheritance searching your state of residence is not enough. You need to search a database that covers all 50 states and the federal databases.

Now that you know what unclaimed inheritance is you can search to see if you or your family are entitled to any of the $35 Billion in unclaimed money waiting to be claimed!

Nicole Anderson offers a free search for your portion of the $25+ BILLION in unclaimed money in the United States. Millions of Americans are unaware they are owed money. It could come from old savings bonds, uncashed checks, checking and savings accounts, the list goes on and on. Click on to http://www.cashunclaimed.com for your free search and see how much money is owed to you and your family.

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A Quick Look At Inheritance Taxes

By Christoper Rivers

When someone is managing the estate of a person that passed on that executor of a will has to address the challenges associated with estate and/or inheritance taxes. Estate and inheritance taxes are often confused with each other and as a result most people have no idea what the difference is. As a quick class estate taxes pertain to the property or estate and inheritance taxes impacts the beneficiaries of the estate. Another difference is that estate tax is levied by the federal government whereas an inheritance tax is imposed by the state. Rates for inheritance tax can vary from state to state with some states imposing no tax at all. Regardless of the number of beneficiaries, each will be taxed and required to pay his or her own share.

Estate taxes obligate the executor to pay taxes to the federal government from the proceeds remaining from the deceased person estate. In cases where there are no monies remaining, the assets are liquidated to pay the tax. Otherwise the tax will be passed down to the estate's inheritors. Executors should also be aware that this can arise even when dealing with inheritance taxes owed on the state level.

Taxes are calculated by using the current tax rate as wells as determining the relationship of the heir to deceased. Many times children and spouses will enjoy lower taxation rates than other beneficiaries, which might include other relatives or acquaintances. In some cases the taxation amount may be determined by reviewing the fair market value of the property. As usual if the beneficiary does not have the proceeds to pay the tax bill the assets are to be sold to make the tax payment.

Despite the many challenges that come with estate planning and inheritance taxes there are many advantages. Heirs can navigate the murky waters that face in dealing with inheritance taxes and estate taxes by requesting that all taxes be paid from the proceeds of the estate. By using the services of a certified financial planner who has experience with estate planning a specific and strategic plan can be proposed to provide necessary access to the financial documentation that the government may request. There are several additional choices for minimizing or eliminating inheritance tax completely.

It is important to remember that each state has its unique set of guidelines and instructions that determine the inheritance taxes. However with the help of an estate planner who has expertise in this area in addition to local knowledge as well as knowledge about the ever-evolving tax codes. If you spend time researching estate and inheritance taxes you will find that there are many debates on both sides due to the constant changes with the tax law. There is a word of caution to many who attempt to plan their own estates because they can put their heirs in a very bad tax situation.

Chris Rivers offers a FREE tax guide which gives you insider tips and secrets to save you money on every type of tax such as sales tax, income tax, real estate taxes, estate taxes and many more.

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