Retirement, IHT and Probate

by | Mar 26, 2024 | Ripe News

How well are your personal finances organised?

Will your executors know what assets and liabilities you may have?

In last August’s e-news, we talked about Wills (and gave practical tips) and now that Pratima’s doing probate work, she finds it much simpler when clients have used our “estate” spreadsheet, which helps to clearly set out your assets and liabilities and sources of income. Of course, it helps to give executors a good understanding too.

We’re going to be sending the estate spreadsheet to clients with our 5 April tax return letters, which asks you to set out other key information too, such as:

  • Name of executors
  • Surviving spouse income statement
  • Financial commitments
  • Power of attorney
  • Where your Will is located

Of course, the financial information gives us a holistic view of clients’ affairs, allowing us to advise you, should you wish, on retirement plans and on Inheritance Tax planning.

In respect of retirement planning, we look at where you are now and where you want to be – i.e. how much will you need to live on and what will be the source of your income – and work with you to create the actions needed, whilst always considering tax (and the benefits of pensions).

All of which leads neatly into Inheritance Tax planning and how much you may be able to afford to give away.

And with Inheritance Tax (IHT) running at 40% on estates worth more than £325,000, (plus the residence nil rate band of £175,000 for estates worth less than £2m) – with rising house prices pushing more people over the threshold – clients are of course keen to minimise IHT.

There are many ways to do this – but always take professional advice first – for example:

  • Making lifetime gifts – but beware the 7 year rule, which recently caught out more than 13,000 families
  • Being married or in a civil partnership
  • Making regular gifts out of income
  • Leaving money to charity

And then there are trusts, which always require careful and specialist consideration….