Common myths about inheritance tax planning

Inheritance tax planning is a crucial aspect of financial management, yet it is often shrouded in misconceptions and myths. Now is an opportune time to address some of these common misunderstandings and shed light on the realities of effective inheritance tax planning. In this blog, I will dispel some of the prevalent myths surrounding inheritance tax, providing clarity for individuals and families seeking to secure their financial legacies.

Myth 1: inheritance tax only affects the wealthy

One of the most pervasive myths is that inheritance tax is only a concern for the wealthy. In reality, the threshold for inheritance tax is applicable to a broader range of estates. Understanding the current thresholds and exemptions is essential for effective tax planning, regardless of the size of your estate.

Myth 2: giving away assets automatically reduces inheritance tax

While gifting assets can be a legitimate strategy for reducing inheritance tax, it’s not a one-size-fits-all solution. The timing and nature of gifts, as well as the relationship between the giver and receiver, can impact their tax implications. It’s crucial to seek professional advice to navigate the complexities of gifting and ensure compliance with tax regulations.

Myth 3: a will alone is sufficient for inheritance tax planning

A well-crafted will is undoubtedly a cornerstone of inheritance tax planning, but it’s not the sole solution. There are various strategies, such as trusts and lifetime gifts, that can complement your will and enhance your overall tax planning. A comprehensive approach that considers all available options is essential for maximising tax efficiency.

Myth 4: inheritance tax can be entirely avoided

While there are legal ways to minimise the impact of inheritance tax, completely avoiding it is a misconception. Inheritance tax is a legitimate tax levied on the transfer of assets, and attempting to evade it through questionable means can lead to serious legal consequences. It’s essential to focus on lawful strategies to manage, rather than entirely eliminate, the tax burden.

Myth 5: inheritance tax planning is a one-time activity

Inheritance tax planning should be viewed as an ongoing process, not a one-time event. Changes in personal circumstances, tax laws, and financial landscapes may necessitate adjustments to your inheritance tax strategy. Regular reviews and updates are critical to ensuring that your plan remains effective and compliant with the latest regulations.

Myth 6: inheritance tax planning is only about property

While property is a significant consideration in inheritance tax planning, it’s not the sole focus. Other assets, such as investments, savings, and personal belongings are also subject to inheritance tax. A holistic approach that considers all aspects of your estate is crucial for developing a comprehensive tax strategy.

Conclusion

As you embark on inheritance tax planning, it’s essential to separate fact from fiction. Dispelling common myths surrounding inheritance tax allows for a more informed and effective approach to securing your financial legacy. Consult with legal and financial professionals to develop a personalised and legally sound inheritance tax plan that aligns with your unique circumstances and goals.

To discuss this, or any other related matter with Louise directly, please call us, start a live chat or email us at info@hartbrown.co.uk.

*This is not legal advice; it is intended to provide information of general interest about current legal issues.

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Louise Harrhy

Partner, Head of Trusts & Estates

A Partner based in Cranleigh, Louise is also Head of the Trusts & Estates team at Hart Brown and has extensive experience in a broad...

Louise Harrhy- Head of Trusts & Estates

Partner, Head of Trusts & Estates

Louise Harrhy

A Partner based in Cranleigh, Louise is also Head of the Trusts & Estates team at Hart Brown and has extensive experience in a broad range of Private Client work.

Louise helps clients with all aspects of Private Client work and deals with the formation and administration of trusts, lifetime and post death planning and will drafting. She also works with other professional advisors to provide a complete package of advice.

Louise has considerable experience of applications for probate and estate administration often including complex issues and overseas assets. Additionally, she can help clients with Court of Protection matters including lasting powers of attorney and court applications for gifts.

"Louise Harrhy is highly experienced in probate applications and estate administration especially matters involving offshore assets. She is skilled in Court of Protection matters, including deputyships and lasting powers of attorney." (Chambers UK 2016)

"Louise Harrhy is a really driven and committed lawyer. She advises clients on a wide range of areas, including the creation of wills, the establishment of trusts and the administration of estates. Her work also incudes Court of Protection matters." (Chambers UK 2017)

Louise is also a member of The Society of Trust and Estate Practitioners.

What do clients say?

"Louise at Hart Brown helped me enormously in sorting out my deceased relatives affairs. I would not have been able to cope without her generous patience and understanding."

"Louise Harrhy was recommended to me as a highly professional and knowledgeable solicitor when I was seeking some advice on Estate Planning. This she certainly is and her advice regarding Wills, Trusts and LPAs has been reassuring and helpful in planning the way forward. I have been left with the impression of Hart Brown as a firm of solicitors that can be respected and trusted."

"I have had excellent attention from Louise Harrhy and her team at the Cranleigh Office recently, dealing with the Wills , Probate and Estate of 2 close relatives. These matters are never easy to deal with , but the combination of professionalism and kindness shown to me by Louise has been a huge help. I would not hesitate to recommend Hart Brown to anyone finding themselves needing help with such matters."

"I found Louise Harrhy to be very helpful and professional in her dealings with my late mother's estate. I would definitely recommend her and Hart Brown."

"Excellent!! Friendly and professional service by Louise Harrhy."