‘A wake-up call!’ Inheritance Tax warning as Britons urged to act to avoid high bill
Inheritance tax: Financial advisor provides advice
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Inheritance Tax, a levy charged on the value of an estate above a certain threshold, is just one of the myriad of administrative issues people will have to deal with when their loved one dies. However, these issues can be made unnecessarily complex if people fail to take preventative measures ahead of time to sort out their affairs, one expert has warned. Stephen Moses, managing director at digital estate planning firm Zenplans, spoke to Express.co.uk ahead of the organisation’s launch today.
He said: “There’s a popular misconception that estate planning is only for the rich; it’s not. For many people, the word ‘estate’ conjures up images of mansions and sprawling grounds, but, firstly, you don’t have to be wealthy to have an estate, and secondly, estate planning is not just about finances – it is about ensuring your wishes are met.
“Anyone who has any assets at all – a home, car, any savings or investments, pension funds, digital assets – has an estate, and if you want to have a say in how your estate is handled when you have passed away – or become incapacitated – you need an estate plan.
“Estate planning is a specialist area, which if executed well, will have a meaningful impact on your family’s financial and emotional wellbeing.
“Accountants, solicitors and financial advisers are all able to help, particularly those that are members of Society of Trust and Estate Practitioners (STEP), so it is best to seek advice.”
There are steps Britons can take to protect their estate, but for those who are not convinced these actions are necessary, Mr Moses took the time to explain how they could make a huge difference, and why they are so important.
Firstly, estate planning can ensure Britons protect both themselves and their assets, even long after their death. However, another part of estate planning is to decide who will make decisions for a person if they become incapacitated.
In this sense, a Power of Attorney is likely to be the best bet, as this individual can act on a person’s behalf to make financial and legal decisions, and ensuring assets continue to be managed in the person’s best interest.
Estate planning is also key in ensuring a person’s wishes are met, and Mr Moses has urged people to consider writing a Will if they haven’t already, or indeed, updating it if their circumstances have changed.
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A failure to draft a Will will mean the law is forced to take over in place of someone’s wishes, and the outcome could be vastly different to what a person first hoped.
Planning one’s estate helps people to not only manage their assets now, but to officially record how they wish them to be distributed upon their death.
Perhaps one of the most important financial issues when it comes to estate planning is a minimising of Inheritance Tax (IHT), which assists Britons in maximising the amount of wealth they are hopeful to pass on to others.
Recent figures from the Office for National Statistics have shown Inheritance Tax receipts for April 2021 to August 2021 are 35 percent higher than in the same period a year earlier.
Mr Moses explained: “This is likely due to a combination of things, but primarily the fact that the pandemic resulted in more unexpected deaths and therefore, more wealth being transferred, and the fact there was a boom in the property market which brought more estates over the fixed IHT threshold.
“These latest figures should act as a bit of a wakeup call that people need to be proactive and start talking to professionals and their families about their assets, and their wishes, sooner rather than later.”
An equally important issue is a partially financial one, but also relates to emotions – given estate planning can make it easier for loved ones when a person passes away.
When someone dies, family and friends will be dealing with grief, which is already a challenge, but this could be compounded by having to make important financial decisions with little guidance left behind by the person concerned.
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It could also mean the probate process is longer and more costly, as information is hunted down by executors and financial professionals.
Mr Moses stressed that in the modern and digital world, there are vanishing paper trails, which could make it even more difficult when a person passes away.
It is more important than ever, he said, to store everything important in one secure place.
In choosing a method of financial security, Britons can rest in the knowledge that their affairs have been dealt with, eliminating chaos and unnecessary expense.
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