Using Whole of Life Insurance for inheritance tax  planning

Whole of life insurance can be a very effective tool for dealing with Inheritance tax.

Inheritance tax is the tax on someone's estate over the value of £275,000. If you have an estate over this amount then your beneficiaries could have to find an amount of tax equivalent to 40% of the excess.

This means that an estate of say £350,000 would have a potential tax liability of £30,000 due to the inland revenue on death.

If everything has been done that can be done to mitigate the tax and there is still some tax left over then the only way that you can ensure the beneficiaries will have the money to meet the bill is to write a whole of life insurance policy in trust to them for the amount of the tax.

In the event of death this plan will be paid out to the beneficiaries under the trust and they will be able to use the money to pay the tax man.

If you are not sure whether you have an inheritance tax liability why don't you use our free Inheritance tax calculator to work it out. This calculator is only as accurate as the figures that are put into it and it is only a guide to the amount of tax that may or may not be due. If it does indicate that you have an inheritance tax liability you should speak to us to ensure that everything that can be done to mitigate it is being done before you take any remedial action. To do this just use the contact tab at the top of this page.

Please use this tool as a guide to estimate inheritance tax that should be due on your estate. This is only an indication and does not take into account any IHT planning that has already taken place. This calculator assumes the current nil rate band of £275,000 for the tax year 2005 to 2006 is applicable. NB There has to be a figure in every box, before you press calculate, even if it is zero

Assets Main Residence Other Property Furniture/Personal belongings Cars and any other assets Life Insurance Under Trust Life Insurance NOT under trust Savings & Investments Liabilities Mortgage Other Mortgages Other liabilities Total gross estate £ Total gross liabilities £ Total net estate £ Potential tax on net estate £

As has been said previously this does not necessarily guarantee that you have an inheritance tax liability, you should speak to us to ensure that everything that can be done to mitigate it is being done before you take any remedial action. To do this just use the contact tab at the top of this page.


 

Why not talk to an qualified advisor free on 0845 539 04 04