What is included in my estate?

I own a house jointly with my wife as well as some investments. What assets would be included in my personal estate?

Asked by katie.jenkins

2 Answers

Log in or sign up with email
By submitting you agree to our Terms of Service
Answered by Paul Jackson, IFA in Manchester , LANCASHIRE
Assets that typically make up an estate for inheriatance tax purposes are :

Assets are anything that has a value, such as:

•money in bank, building society or savings accounts
•houses and land, including farmland
•businesses, or business assets, owned by the deceased (or a business partnership of which they were a member)
•investments such as stocks and shares, including family shares
•personal belongings, including jewellery, antiques and other collectibles
•furniture, fixtures and fittings in a house
•motor vehicles
•pensions that include a lump sum payment on death (as opposed to an ongoing annuity to a surviving partner)
•assets in a trust from which the deceased benefited
•payouts from life insurance policies
•foreign assets held abroad including foreign bank accounts, property or shares
| 11.17.10 @ 09:32
Comment
Log in or sign up with email
By submitting you agree to our Terms of Service
$commenter.renderDisplayableName() — {comment} | 08.17.17 @ 03:58
Answered by D C, IFA in Bristol, DEVON
Whilst Paul makes some useful points, I do feel that a couple of them need further explanation, as they normally would not contribute to your estate.

Pension payments, and payments following 'death in service' are pretty universally outside your estate, because they are paid 'in Trust' to your survivor or beneficiaries. In other words, those payments never enter your estate. Payments from insurance policies, too, will not enter your estate as long as they have been written (or have been placed) 'in Trust'. If you are not sure, ask your financial adviser or insurance company - it is an easy task to put policies in trust, and your insurer will have the correct forms. There should be no charge for this.

Farmland, businesses and business property, as well as certain specified investments, are likely to have zero inheritance tax liability, or a reduced liability, as long as they have been owned long enough (just 2 years). This is known as 'Business Property Relief.'

Finally: investments. Yes, if you benefit from investments held within a Trust (ie you receive the income or rent, for example, but are not entitled to spend the investment itself other than reinvesting it within the Trust), then the value held within the Trust will form part of your estate for inheritance tax purposes. However you may have, a 'discounted gift scheme', which is a special Trust that allows you to invest capital and receive the benefits in the form of income. Such a Trust is a straightforward, mainstream and recognised financial tool, and it falls under the 7-year rule. In other words, if you take a discounted gift scheme and live for 7 or more years, then no IHT will be payable based upon the value held within the Trust; there are some potential immediate inheritance tax benefits when you create the Trust, but this is rather too big a subject to explain here.

Personal belongings -'chattels' of relatively low value are excluded from the computation. However, gifts to individuals (or into trusts) made within the 7 years before death do give rise to inheritance tax, on a sliding scale. Those gifts are known as 'potentially exempt transfers'. There are various small exemptions - an annual amount, and gifts on marriage of a child or grandchild, for example | 01.03.11 @ 19:27
Comment
Log in or sign up with email
By submitting you agree to our Terms of Service
$commenter.renderDisplayableName() — {comment} | 08.17.17 @ 03:58
Log in or sign up with email
By submitting you agree to our Terms of Service
Free SimplyFinance Membership!

Get FREE, full access to SimplyFinance.com

Answered by

Paul Jackson
Paul Jackson, IFA in Manchester , LANCASHIRE

Related Questions

Q&A
Asked by Sally
Q&A
Asked by katie.jenkins
Q&A
Asked by ritesharunkadu
Q&A
Asked by katie.jenkins
Q&A
Asked by alexander
Q&A
Asked by katie.jenkins