Inheritance tax: Financial advisor provides advice
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A will is a piece of legal documentation which outlines the wishes of someone who has recently died, specifically regarding the care of their loved ones, as well as the distribution of their assets. Usually, most wills granted probate are made public and are widely accessible to the general population for analysis and scrutiny. However, in the case of Prince Phillip, this is not the case and many people are wondering if there are parts of their estate that can also be kept secret following their death.
Speaking exclusively to Express.co.uk, Jim Sawer from Kingsley Napley is outlining how Britons can mitigate aspects of their estate being made public in their wills.
According to Mr Sawer, a partner in the law firm, the length of time the Duke of Edinburgh’s will is being kept under wraps is extremely unusual.
He explained: “It’s very rare. Prince Phillip’s Will has been kept secret in the public and private interest of the crown.
“I’ve never heard of it being kept secret before. Frankly, I don’t see why Prince Phillip’s should be private.”
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However, according to the tax expert, there is a way for non-royals to hide some of their most loved and well-earned assets after their death.
Mr Sawer said: “All wills are published. If you leave a will and probate is granted on it, it will be published.
“I could go online and for about £10 get a copy of any Will of anyone who’s died. Most Wills that people get copies of are not from famous people. They are family members looking to see where inheritances are gone.
“But, if you are particularly concerned about keeping secrets, then the way to do it is to make sure that your will does not tell the whole story.”
One of the most common ways of doing this is to set up a trust to assist your loved ones after your death, however the Kinglsey Napley partner is skeptical of its benefits.
Mr Sawer said: “Trusts are not of themselves a tax-saving wonder weapon.
“People have this thing about trusts and they’re misunderstood. Most people set up a trust because they want to make a gift.
“They want to make a gift either to members of the family or they want to make a gift for inheritance tax saving purposes.
“It’s the gift that normally has the tax benefit, and the trust is normally wrapped around the gift. Not for tax purposes, but for family purposes.
“So for example, if I wanted to give a million pounds to my grandchildren, because they are under the age of 18, I’d make that via a trust rather than through gifting.
“The thing is that trusts are taxed in a different way to outright gifts and the taxes are for the most part detrimental.
“Instead of being another tax saving vehicle, they can be a tax expensive vehicle.”
Despite being a great saving tool at face value, gifts in themselves also pose difficulties for families looking to save money on inheritance tax, especially when it comes to property.
Mr Sawer explained: “People do want to give property to their families in their lifetime, normally for one or two reasons.
“The first is to put it beyond the reach of inheritance tax and that’s the statute sponsored way of saving taxes.
“It’s kind of strange. Some people commit themselves to an old age of poverty by giving all their assets away.
“The most common mistake is different from the gift with reservation, where mum and dad give their house to their child and carry on living there. This doesn’t work for inheritance tax purposes.
“You can’t make a gift and preserve the benefit. You can’t give the family home away and carry on living there.
“Not only does it not work for inheritance tax purposes, it’s just bad news.
“Firstly, your child might sell the house from under you. Secondly, it’s not very good for capital gains tax purposes, because your home is tax free when you sell it.”
While Britons are encouraged to be aware of the money they could potentially save through gifts and trusts before passing away, it is also vital to remember the potential financial pitfalls of doing so.
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