Originally published 10 June, 2020.
The turmoil of the Covid-19 crisis has made us all consider our
own mortality. There probably isn't one of us who hasn't
personally been touched by the crisis in some form or another. No
one wants to deal with the issues surrounding the end of a life,
yet being organised can ease the burden for those left behind.
Making and reviewing Wills, making Lasting Powers of Attorney and
simplifying your assets are steps everyone should consider, not
just the elderly.
Covid-19 sets a bleak picture for many young families who are
likely to have to shoulder the tax burden that this crisis will
inevitably bring. Inheritance Tax is not the tax to solve the
nation's debt problem – it accounts for less than 5% of
tax revenue. Planning to minimise Inheritance Tax could make an
enormous difference to families and relatives left behind with very
little impact on HMRC's purse.
Ironically, this is a good time to tax plan. Any gifts made while
the markets are depressed will freeze the value of that gift for
Inheritance Tax. This means that any rise in the value of the asset
after the gift is made will be free of IHT. It is worth reflecting
on what assets you need to live out your life and whether there is
merit in gifting investments or property now while valuations are
low. Assets with a paper gain can be transferred into a family
trust and any capital gains tax deferred. Family trusts up to the
nil rate band will be able to receive that little bit more without
triggering tax while valuations are down.
It is human nature to hold onto more assets and wealth than we
need. Do we need a change of mind-set to accept our mortality,
prepare for the end and enjoy the time we have left? This enjoyment
could be enhanced by passing on assets to those who need them now
whether this be loved ones or charities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
