As Benjamin Franklin wrote in 1789, “nothing can be said to be certain, except death and taxes.” Wise words indeed – but with appropriate planning, you can reduce taxes and other costs when you die.
This post gives some tips on how to do that.
- It’s very important to have an up-to-date will that has been properly thought through and written by a professional. It should also be correctly signed and kept in a safe place.A badly worded, incorrectly signed or lost will can lead to significant difficulties and large legal costs to sort out. If it can’t be resolved, the estate may be treated as intestate – which can result in large inheritance tax (IHT) liabilities.
- It’s also important to have an Enduring Power of Attorney (EPA) in place, so that someone you trust can manage your financial affairs if you become incapacitated. Without an EPA, you can incur significant costs.
- It’s a good idea to put life insurance policies into an appropriate trust. Otherwise the proceeds will be paid directly into your estate, which again could result in unnecessary IHT.
- If you die before you’re 75, beneficiaries are able to draw down the benefits of your personal pension plan tax-fee. However, beneficiaries who are not a dependent need to be nominated. Otherwise payments could be made into your estate and be liable to IHT.
Proper planning of your will, trusts and pensions are essential to reduce unnecessary taxes and costs when you die.
Here at Johnston Kennedy, we can help you with that planning.