Singing Pig

Hi Sian, Sorry if you think I've missed the point but I haven't. I realise that posters want specific answers but unless they disclose relevant personal and financial information (which I wouldn't expect) when discussing such complicated and intangible topics as IHT mitigation or avoidance it is unlikely that they will receive specific responses that are relevant, accurate or beneficial. Failing this it would be like taking advice in the pub where everyone has a view, an anecdote and an opinion all of which might be right or wrong but who knows?

I have already suggested that NRB Wills can be beneficial as can buying property abroad but there are other solutions and strategies dependent upon your circumstances.
However you asked specifically in para 2 about NRB wills so I'll just add a few general comments which should not be construed as personal advice of any kind:

1) NRB wills can save over £110,000 IHT if done correctly in the right circumstances. This isn't too difficult but it fails to be fully effective where the net estate exceeds the NR threshold (currently £275K) for a single person or double the NR threshold for a married couple. The problem and inadequacy arises with bigger estates or those estates where an inheritance that will increase the value past future NR thresholds is likely .

2) Where any Trusts and/or gifting are involved there is always the possibility of the Inland Revenue considering the arrangement artificial or claiming a preserved benefit or ownership and control and seeking to levy IHT or income Tax, even retrospectively!

3) The NRB Will only works if you die. It does not protect your wealth and assets from threats such as care costs, creditors or mental incapcity whilst you are still alive.

4) Some advisors even suggest that it is better not to use a NRB Will and to leave the IHT mitigation until after death. but this raises other issues and constraints.

I hope this helps but fear these general points will not satisfy your quest for knowledge. Again I suggest that you will achive the maximum benefit if you can find a specialist that you trust and can work with to help you create a bespoke wealth preservation strategy.

Regards, Paul.






Sorry if this doesn't provide what you want but again I suggest that you try to find a specialist that you trust to consider your whole circumstances and aspirations rather than seeking bits of general information that may or may not be relevant to your situation.
Paul.

 Many thanks, Paul! This now gives me a quite good perspective.

Hi Sian,

It took me 2 years to sort my parents wills out. This is because I visited about 8 advisors on iht and only 2 of them seemed to know what they were doing.Before I visited them I made sure I new the basics of iht and trusts.I had already passed the tax papers for ACCA .Anyway when I questioned these advisors I found that many of them did not understand even the basics of iht and one of them wanted to charge me £135 an hour!

Of the two advisors that seemed competent, one of them wanted to charge my parents £6000 and the other £300.In the end I selected the £300 option and he produced wills for both my parents using   a discretionary trust to make sure the first nil rate band is not wasted on death.One point that he did mention that I have never seen mentioned anywhere else is that if there is a reasonable time gap between the death of the spouses, it is possible to avoid paying iht on 3X£275k and not 2x£275k.I'm sure this must be true because he seemed extremely competent and has a qualification from the Society of Trusts and Estate Practitioners as well as being a solicitor.Interestingly, the other competent advisor also held these qualifications.I did talk to some accountants,ifas and solicitors without the STEP qualification and they didn't seem to know what they were doing.

Getting good advice is easier said than done.I could spot a bullshitter in this field because of the knowledge I already had.But if you walk into this topic with no knowledge you may end up with a cowboy so do be careful.

A very good place to get free advice on tax is a website called www.taxationweb.co.uk

There are of course other ways to protect your assets apart from using up the nil rate bands.You can gift wealth and after 7 years it becomes tax free as long as you don't die before the 7 years is up.Another good way to avoid tax is to use lifetime mortgages.A lifetime mortgage means that you can receive money from a lender eg mortgage express and they don't charge you interest on the loan. Instead the interest payments roll up and they are taken out of your estate on death together with the principal loan.This mortgage effectively reduces the net value of your estate on death. Personally, I think they are a good idea because you can get quite a good interest rate ie about 5.75% and if you are asset rich but cash poor, it will make your life more enjoyable.

Finally, if you want to know which Solicitor I used he is called Michael Rapps and works for Wadge Rapps and Hunt in Backwell Bristol.

One other point i would like to raise is that my parents own a cottage with 6.25 acres and they keep a horse, many sheep, ducks, chickens and bees.Now am I right in thinking that agricultural property is not subject to IHT? If this is true could I get my parents property classified as a agricultural property and then it would become iht free.

I recently read an article in the Estate's Gazette and it stated you don't pay iht on agricultural property.Perhaps Sian, should sell her property and go and buy a farm?