THE New Year is always time for reflection, resolutions and change – 2021 more so than ever after the unprecedented events caused by the pandemic.
People have found themselves out of work and thousands of businesses have had to close their doors. Many have lost friends or relatives and it’s made us all think about the future and our own mortality just that little bit more.
The spike in financial uncertainty has caused many grandparents to want to provide greater security for their grandchildren. More than one in seven grandparents, (according to a survey by Killick & Co), said the pandemic had made them reassess how they want to pass on their inheritance, with two in five stating they wanted to increase the monetary amount.
Hannah Pearson, a solicitor in Pearson’s Wills, Trusts, Tax and Probate team, said: “It is perfectly understandable after the year that we’ve had that grandparents will be more mindful of their grandchildren’s future – but they mustn’t forget their own needs either.
“It is very important to discuss such matters so families don’t have to pay more tax than they need to.”
Top tips to reduce your inheritance tax bill:
• Give to your spouse or civil partner – Anything you give them is free of inheritance tax
• Give to your family or friends – Inheritance tax is due on the gift’s value but only for seven years
• Give annual amounts away – you can give up to £3,000 per year without any inheritance tax implications
• Give to your children and grandchildren when they get married – you can give £5,000 to a child or £2,500 to a grandchild as long as the gift is made either on the day of the wedding or shortly before that date
• Put assets into a trust – when you put cash, property or investments into a trust they are no longer part of your taxable estate once seven years have passed
• Donate to charity – anything you leave to charity is free of inheritance tax
A 2018 study showed that only 1/5 of people talk about inheritance with their families and another 1/5 saying they have no idea how much they are likely to inherit.
“When there are significant sums of money involved it is so important to talk to loved ones early about your intentions, added Hannah.
“This could help so many families avoid tax bills all because parents are too embarrassed to talk about their financial future.
“You could be helping your children or grandchildren get on the property ladder or give them a good start in life by giving them their inheritance early.”
If you don’t have grandchildren yet it’s never too early to think about financial planning; making a will is a good start or consider Lasting Power of Attorney (especially if you have a business and might become incapacitated and need someone to run it for you). The main thing to do is to get good legal advice.
Get your New Year organised from the start and call Pearson on 0161 785 3500 for a free no obligation chat.