Posted: Friday, 4 January 2019 @ 13:43
As has been recently reported within some of the press, paying inheritance tax is now the norm for bereaved families in the south east, with new figures showing the average cost of a home has exceeded the IHT limit threshold for the first time.
The average price of a house in the south east of England reached £326,000 in June, after gaining almost 10 per cent in a year. If your estate upon death is more than £325,000, IHT kicks in at 40% above the balance.
The inheritance tax threshold(known as the nil rate band) has been frozen at £325,000 since April 2009.
This is mitigated by the fact that if one is married, your spouse can receive everything inheritance tax free, the IHT liability applies in on the second death.
Having dealt with a number of elderly people in a consultancy capacity, despite protestations by the press, I do not think that IHT is of massive concern to most elderly people.
It does not apply and its mitigation involves significant costs in professional fees which people cannot be bothered to pay.
In my experience what is of greater concern to elderly people and their families is the quest for care fees avoidance. The recent Care Act which imposes a cap of £72,000 will in fact lead to some elderly people face paying £150,000 for residential care before they hit the cap on care costs in England, an analysis suggests.
The sum is more than double the £72,000 figure the cap will be set at when it comes into force in 2016. That is because extra costs, such as the fees for accommodation, do not count towards the cap. And people can get desperate to avoid paying care fees despite the fact that it puts them in the hands of the Local authority in choosing the care home.
As some people do not have confidence in lawyers fees, they unwisely head to the unregulated sector.
In particular many individuals are purchasing products such as setting up a family trust. It can be that that thuis may work but it is worth reflecting that this can be considered a deliberate deprivation of assets by the local authority.
The things people will do to protect the inheritance for their children.