To help you control what will happen to your assets after your death, you can create a trust. This is a crucial consideration when figuring out your estate plan and how to prevent paying inheritance tax.
A trust is a helpful
instrument for asset protection and to give you flexibility in how you handle
your finances, in addition to assisting in lowering the inheritance tax you and
your beneficiaries will pay. Nevertheless, it is wise to seek counsel before creating
a trust.
How do trusts for
arranging inheritance taxes operate?
The settlor is the
individual who creates a trust. The settlor will choose trustees, who will
retain the legal title to the asset and oversee the trust on the beneficiaries'
behalf.
During their lifetime,
settlors frequently serve as trustees. A trust deed will detail the entire
plan. You could, for instance, create a trust to cover a grandchild's college
expenses or the lifetime support of a handicapped relative up to a certain age.
Why is less inheritance
tax charged on property held in trust?
The assets and money in
the trust fund are no longer regarded as belonging to your estate if you, your
spouse, and your minor children are unable to use them for your advantage.
This is so that you are
aware that, legally speaking, the assets are now owned by the administrators
and beneficiaries and are no longer in your possession.
As long as you survive
for more than seven years after creating the trust, this is valid. You pay the
entire amount of IHT at 40% if you pass away within seven years of establishing
the trust. More and more individuals are considering creating inheritance
tax planning trusts to reduce or eliminate inheritance taxes.
In order to create a
trust that will shield the recipient from inheritance tax, assets from an
estate can be transferred to the trust.