Things One Should Know About Inheritance Tax (IHT)

Written By: Simon P Jennings on November 19, 2009 No Comment

Many people do not understand what Inheritance Tax means, and in order to discuss about its essentials, we should be clear about its meaning. This tax is paid on the land of a person who has died.

In certain cases, inheritance tax is payable on trusts or gifts made during the lifetime of a person. As per the standards of 2009-2010, the bar set to pay the inheritance tax was 325,000. Most estates are not eligible to pay the inheritance tax, as they are below the standard set. Inheritance tax is the acronym for IHT.

Usually the inheritance tax is 40% of the estate in question. To understand this statement, you need to comprehend the meaning of estate. Your estate shall be everything that you own. This includes your home, other real estate, bank accounts, and investments, retirement benefits from your company, IRAs, your insurance policies, collectibles and personal belongings.

However, after October 2007, there were certain changes made in the standards and all those people who came in the class of married couple or registered communal partners could enlarge the edge decisively for their estate after their spouse expired. About 650,000 of inheritance tax could be set, according to the standards of 2009-2010. Special representatives or perpetrators are required to move the inheritance tax, which is not used (nil rate bands) to the spouse of the deceased.

Another question that is of extreme importance is that who is responsible for paying the inheritance tax? Different people can pay inheritance tax at various scenarios. However, most often or in general cases, the executor, or the personal representative, using funds from the estate of the deceased, pays this tax.

When assets in or transferred into a trust are brought into consideration, the responsibility of paying the inheritance tax is on the shoulders of the trustee. In the category of gifts, the beneficiary, who has inherited them from the deceased, is supposed to pay the inheritance tax; however, this scenario is not very commonly observed.

Exceptions, however, exist in certain cases where the estate surpasses the standardised margin or threshold, and yet you can pass on the assets, without having to pay inheritance tax. Any gift that comes under the category of UK registered charity shall be excluded from Inheritance tax.

If a person manages to live for seven years after transferring estate as a gift to someone else, those assets shall be excluded from inheritance tax. In this case, the threshold will also not be considered. Gifts of 250 bucks shall also be inheritance tax-free and can be given to numerous people. If you are giving a part of your estate to someone as a wedding or civil partnership gift, then a certain amount of that gift will be excluded from the inheritance tax.

Simon P Jennings is a personal insurance consultant. You may consult with him to know about Beneficiary Trust with the assistance of professionals now at http://www.claimsadvicecentre.com.

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