Inheritance Tax - I will if you will!

Confronting the twin issues of Wills and Inheritance Tax is invariably an uncomfortable exercise but it is, nevertheless, an essential feature of good housekeeping.

 

The present regime of Inheritance Tax certainly holds less fear than its two predecessors, capital transfer tax and estate duty. It is, in many circumstances, an avoidable tax. Even though capital asset values have largely held up and, happily, not mirrored the free-fall of most commodities during the recent recession, many farming families have every opportunity of avoiding liability to Inheritance Tax. The 100 per cent relief applied to agricultural and business property together with the exemption afforded to transfers between husbands and wives mean that, more than ever, it is possible to avoid or at least minimise liability.

 

However, be warned! It cannot be assumed that these benefits will automatically take effect and great care must be taken to ensure that one's business is so structured as to take full advantage of them. In particular, the value of the farmhouse is currently subject to significant scrutiny by the Capital Taxes Office. Careful consideration of these issues with your accountant and solicitors will invariably pay dividends. Whilst taxation is an important factor, many farming families struggle with the problems of succession and a desire to do justice between children, not all of whom may be on the farm.

 

Needless to say, there are no easy solutions; indeed, often very difficult decisions have to be taken. It is vital, though, to confront the issues and decide how best to deal with them in a Will.

 

Sometimes it may be appropriate to use a Will to postpone the difficult decision by creating a discretionary trust and leaving the trustees of the will to assess the requirements of the family at the relevant time and act accordingly. Whichever approach you decide it is proper to adopt, it must inevitably be preferable to the alternative of dying without a Will. This can cause a great deal of distress and sometimes even family strife.

 

So many people whom I see tell me that they have been intending to make a Will for years. There is no time like the present!