It's difficult to deal with the legal ramifications of death while you're grieving. Some of the basics of inheritance tax planning are covered on this site, and a tax accountant may provide much more guidance.

If a person passes away in England or Wales, their inheritance may be subject to taxation in accordance with the Inheritance Act of 1984. However, there is a threshold above which no estate tax is owed. There has been a £325,000 nil rate band in place since April 6, 2009.

If the value of the deceased person's estate (including any gifts made during the previous seven years) is less than £325,000, no inheritance tax is due. A further perk is that if the principal dwelling is bequeathed to blood relatives, they will be eligible to utilise the expanded residential nil rate band (including children and grandchildren).

With forethought and expert counsel, you may reduce your inheritance tax bill dramatically. If you use Taxsteins Ltd to assist you in preparing for inheritance tax, we will carefully examine your financial situation and help you determine the best way to use the various reliefs and exemptions. While there are many options to consider (including the formation of a family investment business, which is discussed in further detail elsewhere), in brief, our plan may consist of the following:

Possible partnerships, such as marriage and cohabitation, are being considered

The Inheritance Act of 1984 provides a tax-free transfer of assets between spouses or civil partners (section 18). With the advent of the "transferable nil rate band," a surviving spouse might get the unused portion of their deceased partner's nil rate band.

Taking into account all of the possible reliefs

Therefore, company property relief may be useful for a wide range of organisations. This reduction is 100% in certain cases (as when a firm or a corporate stake is transferred), and 50% in others (for land or machinery used mainly in the course of business). If some of the deceased's estate consists of farmland, they may be eligible for agricultural property relief. Case-specific factors dictate whether or not postmortem relief, fast succession relief, or taper treatment is the best course of action. At Taxsteins Ltd, we will sit down with you and go through all of your options to help you create a personalised strategy to reduce your estate tax.

Both gifts and transfers are considered

Gifts of up to £3,000 per recipient per year are not included as part of your taxable estate, and wedding presents of up to £5,000 per child or £2,500 per grandchild are not either. Your "annual exemption" may be carried over to the next year (but only for one year). It is possible to offer an unlimited number of gifts up to £250 each, as long as you haven't already utilised an exemption for the same individual this year.

A person's estate tax bill may be lowered or avoided entirely if they make a significant donation to charity. Donating 10% or more of an estate's value to charity may reduce the estate's income tax rate to 36% (from 40%).

If you want to leave your home to your biological, adopted, step, or foster children, the threshold (essentially the "tax-free allowance") increases from £325,000 to £500,000. (by 2020). Donations to nonprofits may be eligible for further tax breaks.

If you want to be sure your donations throughout your lifetime are taxed properly, you should hire a tax consultant. For example, if you don't want your heirs to have to pay any inheritance tax on the assets you leave them, you'll need to demonstrate that you've waived your right to them. To do so may need a move or the acceptance of rent from the property's new owner.

After your death, any amount gifted that exceeds the nil rate band and is transferred in the first three years will be subject to the highest inheritance tax rate (40). Taper relief for the beneficiary is one of several options that may be discussed with your accountant or tax advisor.

With any luck, the previous examples have helped shed some light on this sensitive issue and shown that inheritance tax need not be a source of undue worry if adequate preparation is undertaken.

The tax advisors at TAXSTEINS & Co are well-versed in the intricacies of inheritance tax planning and can help you in a number of ways to ensure that your legacy survives for generations to come. If you'd like to have an immediate, confidential conversation with no downside about your plans for the future, please contact us at 02071559545 or info@taxsteins.co.uk.