Inheritance Tax Planning

Make a Will, Save a Fortune and Get Your Own Back on the Tax Man! (Cont...)

Business and Agricultural Property

If your assets include business and / or agricultural property, special considerations apply because these assets are eligible for special reliefs from Inheritance Tax. For business property the 100% relief is available for sole proprietors of a business or members of a partnership. It is also available to shareholders who have a sufficient holding of shares or securities which give control of the Company or, in the case of unquoted shares, there is control of more than 25% of the votes. Other business assets may qualify for 50% relief.

For agricultural property there are reliefs of up to 100%. The details depend on a number of factors, including whether the land is in hand or let out, the period for which the land has been owned and when any tenancy was granted. The benefit of the reliefs will be lost if the relief enjoying property passes to the spouse. A testator may not however wish to give the property absolutely to the children or some other third party because this would put it altogether out of the spouse's reach. Placing the property having the benefit of the reliefs into a Nil Rate Band Discretionary Trust can be a solution.

Is it too late to do anything after a spouse has died?

Don't despair - consider a Deed of Variation. If your partner spouse or parent has already died without making adequate tax saving arrangements, don't despair, all is not lost! Not many people realise that within 2 years of the date of death a deceased's Will or Intestacy can be varied. Such a Variation requires the consent of the Personal Representatives and any beneficiary affected by the variation. A Deed of Variation can serve a number of purposes although principally it is used to save Inheritance Tax. Other benefits can be to save nursing home fees or protect the legacy of the beneficiary who is at the time of the deceased's death or shortly after likely to face a divorce or bankruptcy proceedings.

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The articles on legal topics published in these pages are for interest only and are necessarily general in their terms. You should not act (or refrain from acting) on the basis of the information given without specific advice, as the principles and laws concerned may change, and their application will vary according to the particular circumstances.