There are many reasons why the making of a Will is delayed, and it can feel like a daunting
prospect even thinking about it, but the fact is that a Will is the only way to ensure your
wishes are honoured after your death.
There are a lot of benefits to writing a Will, but one you may not be aware of is that a Will
can reduce the amount of Inheritance Tax that has to be paid on your estate.
As a general rule, anyone who owns a property which will ultimately be left to children and
or stepchildren/grandchildren (as part of the ‘pot’), can leave £500,000 tax free.
In the case of a married couple, in most cases where assets pass to the surviving spouse on
first death, the allowance of the first to die can be used on second passing – so a married
couple (or those in a civil partnership) can leave £1million tax free (this tax-free allowance
would be less where the total estate is over £2million). Inheritance Tax is paid at 40% on
anything over the tax-free threshold.
Where the estate is likely to be over the Inheritance tax threshold it can be a good idea to
make gifts to charity in your Will. This can reduce the amount of Inheritance Tax that will be
paid when you are gone.
Gifts to charity are exempt from Inheritance Tax – so these sums get taken off the value of
the estate before calculating how much Inheritance Tax is due to be paid.
And…did you know that if you donate at least 10% of your estate to charity, Inheritance Tax
is paid at 36% instead of at 40% on anything over the Inheritance Tax threshold?
Once you have provided for your loved ones, you can use your Will to donate money to
causes that are close to your heart. Your generosity can live on through you if you leave a
gift to charity, and it can also mean that less Inheritance Tax has to be paid!