Inheritance tax is a tax that you have to pay when you die which comes out of the financial estate that you leave behind. You only pay it over a certain threshold. The good thing about inheritance tax is that it can be greatly reduced if you think about it in advance and prepare your financial affairs so that you end up paying less.
So what can you do to reduce your inheritance tax bill ? Well a major way of reducing this bill is available to you if you have a spouse. If you have a spouse then anything you leave to them is inheritance tax free regardless of how much you leave them. If you have children, then you may want to give them some of your money too, in which case you could leave them an amount up to your inheritance tax allowance and leave the rest to your spouse which would mean you would still not pay any of this tax. Then in the future when your spouse dies he or she can leave another amount equivalent to their inheritance tax allowance to your children meaning that your children would have received double the amount of inheritance (free of tax that is) than if the all that money had been passed on to them when you died.
Another way to reduce it is to gift some of your money whilst you are alive to the people you wish to benefit from your estate. Bear in mind though that this is only a good idea if the person you are gifting your money to does not have inheritance tax issues themselves. The other thing to think about before gifting some of your money is the effect this might have on the person receiving the money. For instance if you leave a big sum of money to a young person this may discourage them from building wealth of their own.
If you are not happy to do any of the above options then you could still prepare for your inheritance tax bill by taking out a life insurance policy sufficient to cover it when you pass away.
Hopefully this article will encourage you to think about and make the suitable inheritance tax planning arrangements for your life so that you can make sure your family and friends receive the most possible from your estate instead of giving it to the taxman.
Miguel Poza runs a website about personal finance and saving money where you can find
out about many free money saving tips and read other personal finance related articles which will
help you save money on your finances. You can check it out at
Personal Finance Guide
- Related Videos
- Related Articles
- Ask / Related Q&A
- Save Money By Saving Your Change!
- The Cutbacks in How to Save Money
- Save Money Using High Interest Rate Savings Accounts
- 10 Ways To Save Money On Your Electricity Bill
- Little Frugal Changes Can Save Money
- Learning to Save Money
- How to Save Money by Reviewing Economic Expenses
- Save Money in your Home
: Powerful Tips on How to Set Up Bandit Signs to Get Motivated Sellers to Call You
By: Michel Lautensack | 04/12/2009Learn powerful tips for setting up bandit signs to get motivated sellers to call you.
Interest Only Mortgage: Not For Everyone
By: Paul Wise | 04/12/2009How Interest Only Mortgages work and who they are most suited for.
How Do I Get A Debt Settlement Service With Too Much Credit?
By: Hector Milla | 04/12/2009The great thing about working with a debt settlement service is that they have the attorneys that will be able to resolve your credit crisis. Another good thing about working with a debt company is that no matter how much credit that you have or how many delinquent debts you have piled up, the service will be able to consolidate these debts into one payment that is convenient and affordable to you.
How Do I Get A Service For Debt Settlement Without Owning A Home?
By: Hector Milla | 04/12/2009Debt settlement is the process of hiring a company to negotiate with your creditors in order to reduce the total amount of money that is owed. The remaining debt can then be paid back either in one lump sum, or slowly over the course of a year or more.
How Badly Does Debt Settlement Hurt Credit Rating?
By: Hector Milla | 04/12/2009Any financial move you make may have a negative effect on your credit rating, but doing nothing will have a negative effect. Understanding how debt settlement works, is the key to understanding how it will effect your credit and what you can do to fix any damage done. You should avoid some services, if you are concerned about credit ratings. There are other services you should try to qualify for.
Does Using A Debt Settlement Service Affect Credit Score Negatively?
By: Hector Milla | 04/12/2009A debt settlement program is aimed to improve client’s financial situations through lower monthly payments, and a shortened length of repayment time. Yes, using this type of debt relief service will negatively impact your credit scores. Lower scores will be on your credit report until all loans have been successfully paid in full.
Does A Debt Settlement Service Hurt or Help Your Credit
By: Hector Milla | 04/12/2009Debt settlement is a process in which the debtor and creditor negotiate on an account to accept a one-time reduced payment in order to settle the amount, or forgive the remaining debt. Settling debt can be a frustrating process and often consumers opt to have specialized companies aid in the negotiation process.
Do Debt Settlement Services Work And What Do They Do?
By: Hector Milla | 04/12/2009Debt settlements work as long as you are in touch with the right company and that you do actually take care of your finances properly after dealing with the debt lessening company itself. The goal of these companies is to give you the proper time in order to get back on your financial feet.
What Are Anti Virus Software, Anti Spyware Software
By: Miguel Poza | 22/12/2006 | ComputersNow that most people use the internet these days, it is a very good idea to make sure that you have good quality computer security software installed and protecting your computer. Anti virus software, anti spyware software and having a hardware or software firewall are now essential for everyone using...
Ways To Save Money On Your Tax Bill Each Year
By: Miguel Poza | 04/12/2006 | FinanceNo one wants to pay too much tax and if you are looking for some ways you can reduce the amount of tax you have to pay the taxman each year then take a look at the list of tax saving ideas compiled below:
Things You Need To Know About Inheritance Tax & Some Ways To Reduce It
By: Miguel Poza | 04/12/2006 | FinanceInheritance tax is a tax that you have to pay when you die which comes out of the financial estate that you leave behind. You only pay inheritance tax over a certain threshold. The good thing about inheritance tax is that it can be greatly reduced if you think about it in advance and prepare your financial affairs so that you end up paying less inheritance tax.
Why You Should Make A Will & Some Important Things To Consider When Making One
By: Miguel Poza | 04/12/2006 | FinanceDid you know that about 70 per cent of the UK population have not made a will? If you are one of these people then you really need to look into making a will because if you die without having made one then you will have no say in who inherits your estate.
How To Save Money On Your Gas & Water Bills Each Year
By: Miguel Poza | 02/12/2006 | FinanceAs the cost of gas and water keeps going up, it is a good idea to see what you can do to help reduce your gas and water bills. First of all here some ways of reducing your gas bill each year:
10 Ways To Save Energy And Save Money On Your Electricity Bills For Your Home
By: Miguel Poza | 02/12/2006 | FinanceThere are several different ways you can save energy on your home electricity usage which will also reduces the money you spend on your electricity bills and helps reduce carbon emissions to the environment.
What You Need To Know About Health Insurance
By: Miguel Poza | 31/10/2006 | AdviceWe all hope to stay well and healthy all the time, but we all know that we are going to be sick or may even be unfortunate and have an accident at some point in our lives.
What You Need To Know About Stakeholder Pensions
By: Miguel Poza | 20/10/2006 | FinanceFor those of you who are thinking about planning for your retirement, you will need to do a bit of research on pensions to find the best way to save for your future retirement. This article is about stakeholder pensions and will explain a bit about them and how they work.