The law has changed. Should you also change your will?
Until earlier this year, every individual was entitled to an inheritance tax (IHT) free amount of £325,000 on their estate known as “nil rate band” (NRB).
Since April an additional allowance, known as “residence nil rate band” (RNRB), has been introduced. It starts at £100,000 for 2017/18, rising to £125,000 for 2018/19, £150,000 for 2019/20 and £175,000 for 2020/21. These figures are per person, so a couple may benefit from double the allowance.
This extra allowance creates the potential for each person to have a total IHT free allowance of £500,000 (or £1,000,000 per married couple) by 2020. However, there are a few caveats, which could mean you miss out on this extra allowance as follows:
1. You must own, or have owned a property worth at least the RNRB amount to fully benefit;
2. If your residential property is worth less than the RNRB, you will not fully benefit;
3. The RNRB can be lost in whole or part if your estate exceeds £2 million, or if you are a couple and individually your estates are less than £2 million but combined exceed this amount. Here there is potential for great saving with careful estate planning;
4. The family home must be left to your children (including adopted, foster or step children) or linear descendants on death of both parents;
5. if your estate or the property is left into a discretionary trust, the RNRB may be lost; and
6. If you are unmarried, you may miss out if your wills are not planned strategically
How can we help?
Estate planning and helping to protect you and your family’s future is our expertise.
If any of the caveats above affect you or if you haven’t reviewed your will for more than 5 years, we strongly advise you to arrange a free will review with us to ensure you have adequate arrangements in place to ensure your estate and your loved ones fully benefit from the RNRB.
Also, if you are the beneficiary of someone’s estate, where any of the points above apply, we could consider remedying it and therefore save inheritance tax by considering a deed of variation.
Please contact us on 01202 802807 for help and information or to arrange an appointment.