Inheritance has often been described as a voluntary tax or worse still as a tax that is paid by people whose mistrust and loathing for their relatives is greater than that for the taxman!

Of course many estates have to suffer inheritance tax, but by making full use of certain exemptions and lifetime gifts, it is possible to reduce or remove this liability altogether.

If you don’t wish to give all your wealth away without retaining some control then the use of trusts might be appropriate. In spite of their apparent complexity and media speculation, trusts are inherently simple and will do one of three things;

  1. Gift the capital and income
  2. Gift the capital but retain the righ to the income
  3. Gift the income but retain the right to the capital

Each strategy will have a different outcome for inheritance tax purposes.

For more information