UK ACCOUNTANT EXPLAINS: Avoid These IHT Mistakes: Ensure Your Legacy Stays Intact!

Inheritance tax (IHT) planning is critical for protecting your family's financial future. In this video, I cover the most common mistakes people make when planning their estates and how to avoid them. By understanding these pitfalls, you can ensure that your loved ones benefit from your legacy without facing unexpected tax burdens.

Not Updating Your Will: Failing to keep your will up to date can lead to significant legal challenges and unintended tax consequences. Regularly reviewing and updating your will ensures that your assets are distributed according to your wishes and in the most tax-efficient manner.

Not Updating Your Letter of Wishes for Your Pension: A letter of wishes nominates a beneficiary for your UK pension. If this document is not regularly updated, your pension may not go to your intended recipient, potentially leading to disputes and additional taxes.

Not Discussing Legacy Planning with Family: Openly discussing inheritance plans with your family can prevent misunderstandings and conflicts. It also ensures that everyone is aware of your wishes and can plan accordingly.

Not Making Gifts Within 7 Years of Death: Gifts made more than seven years before death are generally exempt from IHT. Failing to make such gifts in a timely manner can result in significant tax liabilities for your estate.

Not Valuing Your Assets: Without a clear understanding of the value of your assets, you cannot effectively plan for IHT. Regular valuations help identify potential IHT issues and allow you to take proactive steps to mitigate them.

Not Investing in IHT-Free Pensions: Certain pensions are exempt from IHT, making them a valuable tool in estate planning. Not taking advantage of these options can lead to unnecessary tax burdens on your beneficiaries.

Key Dates and Forms:
IHT205 Form: For estates where no IHT is due, this form must be completed to declare the value of the estate.
IHT400 Form: For estates where IHT is due, this comprehensive form is required to calculate the tax owed.
Examples:
Example 1: Susan updated her will every few years, ensuring that her assets were distributed according to her wishes. When she passed away, her family faced minimal tax liabilities due to her thorough planning.

Example 2: Tom did not review his letter of wishes for his pension. Upon his death, the pension went to an unintended recipient, causing family disputes and additional taxes.

Don't let these common mistakes jeopardize your family's inheritance. Watch the full video to learn how to effectively plan your estate and minimize IHT.

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#InheritanceTax #EstatePlanning #IHTMistakes #WealthManagement #TaxPlanning #UKInheritanceTax #FinancialAdvice #LegacyPlanning #TaxTips #PensionPlanning #FamilyWealth #EstateStrategy

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