How You Can Help Gifts in Wills End of life planning Taking control of estate planning Taking control of estate planning Although we all know that death is inevitable and out of our control, facing up to this and putting a plan into action to deal organise our affairs is beyond most of us, even with the best of intentions.Our Norfolk based adviser, Lewis Jones, explores the key factors to consider when looking at later life financial planning. Often speaking about our own deaths can be easier than discussing the deaths of our loved ones like parents and older spouses. It isn’t uncommon to find that many clients do not want to discuss what they might inherit themselves at the risk of sounding morbid or insensitive, but this is equally as important. When is Inheritance Tax (IHT) due? IHT is paid on death. The IHT due will depend on the value of the estate. To work out the approximate value of your estate you need to add up the value of all of the assets you own, ie. property, savings, investments, personal possessions, etc. This can also include the value of items you have the use of and gifts made in the last seven years. Then deducted from this are any liabilities and IHT allowances, reliefs and exemptions available. The current nil rate band, (NRB), of £325,000 is available to everyone, For married couples and civil partners, the unused NRB from the first death can be used for the estate of the second spouse to die, giving up to £650,000 of NRB. Another valuable IHT band is the residence nil rate bandProperty is almost always a major asset for us all and so understanding the residence nil rate band (RNRB) is important.It is a complicated topic, but making the most of this allowance could save hundreds of thousands in inheritance tax, so it is worth being familiar with it. The RNRB came into effect on 6 April 2017. For deaths that occur after that date, estates can now claim RNRB on top of the existing £325,000 NRB. The maximum RNRB is currently £175,000.In order to benefit you will have to have what’s called a ‘Qualifying Residential Interest’. This means the ownership of a residential property has been the deceased’s home at some point. You will also have to pass your property to a direct descendant, such as children and grandchildren. The relief is restricted if the estate value is over £2 million or the property value in the estate is less than the available RNRB. Like the NRB any unused element of the RNRB can be used against the second spouse’s estate. IHT is charged at 40% on the value of the estate exceeding the available bands. The rate can reduce to 36% if 10% or more of the ‘net value’ of an estate is left to a qualifying charity. That's the bad news, but the good news is that, with a little planning, it is also an eminently avoidable tax - perhaps more so than any other. What can be done? The use of trusts, gifting, IHT exempt investments (such as Business Relief (BR) qualifying holdings and pensions), utilising full allowances (such as gifting from surplus income or the annual gift allowance and gifts at weddings etc.) and accurate record keeping can add huge value - both in life and in death. Making the right choice for you will depend on your personal circumstances so professional advice should be sought before embarking on any IHT planning. Ensuring a will is in placeIt is always important to have a will in place and to regularly review it to ensure it is still in line with your wishes. In the interests of dying tidily, leaving your estate to the whims of the intestacy rules or - worse yet - a beneficiary whom you would rather no longer benefited, is highly undesirable, and can result in a legal dispute for loved ones at the worst possible moment. Unlike many financial planning issues which can be time consuming and expensive, will writing for most people is a simple process if your affairs are relatively straightforward.The largest concern amongst my clientsA clients’ biggest concern is usually the uncertainty inherent in later life planning. Most plans we make in life (e.g. retirement, moving, having children or not) are under our control to some degree.Death is both inevitable and unknowable.With increasing numbers in need of care homes and state provisions stretched to breaking point, many people like to prepare for a rainy day so that they can have the best possible care when necessary. However, many clients prefer their beneficiaries not to be hit with an enormous IHT bill if they never needed such care provisions.Avoiding IHT is probably the largest concern, along with its counterpart ‘how much is enough?’.Cash flow modelling can helpCash flow modelling (a way of forecasting your financial future) and planning with other family members can give you the best tools to visualise the future both for you and your descendants. Although nothing is guaranteed other than death and taxes, we can at least create the best plan possible - which is better than no plan at all.A longer-term financial plan of regular gifting alongside spending and IHT reduction where possible is the best way to proceed for most people.Most investment pots did not develop overnight; nor should they be decumulated in such a fashion. A gifting and IHT mitigation plan can be made over the forthcoming decade, for instance, with a term life assurance plan to broadly match the period involved to pay any tax bill should the worst happen. When most people start to think about IHT planning they are not necessarily in the position to gift most of their assets away immediately.However, they also recognise that they will not make use of much of their wealth in their lifetime and that they are better to have too much than too little, come what may from a tax point of view.Therefore, rather than reacting in a kneejerk fashion, protection for this period of flux is recommended as clients move towards later life planning and a plan suited to the clients need. This can also be adapted to the changing needs of the client and the whims of investment market and government regulation as events unfold. Are you looking for some help?If you would like to find out more about any of the areas outlined above or are interested in receiving some advice, I’d be happy to help. Just click here to make contact with me. Lewis JonesIndependent Financial Adviser – Ascot Lloyd Important InformationPast performance is not a guide to future performance and may not be repeated. Investment involves risk. The value of investments and the income from them may go down as well as up and investors may not get back any of the amount originally invested. Because of this, an investor is not certain to make a profit on an investment and may lose money. Exchange rate changes may cause the value of overseas investments to rise or fall.This communication is for information purposes only. Nothing in this communication constitutes financial, professional or investment advice or a personal recommendation. This communication should not be construed as a solicitation or an offer to buy or sell any securities or related financial instruments in any jurisdiction. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in the document. Any opinions expressed in this document are subject to change without notice and may differ or be contrary to opinions expressed by other business areas or companies within the same group as Ascot Lloyd as a result of using different assumptions and criteria. The tax rates, allowances, bands reliefs and rules stated are current at the date of publication and relate to the 2021/22 tax year. Tax rates, allowances, bands, reliefs and rules are subject to change.