You won’t be able to control how or when you die, but one thing is for sure—you have the power to ensure that your loved ones will be taken care of and have everything they need after you pass. 

However, one thing many tend to overlook is the possibility of leaving a large inheritance tax bill. While there is nothing you can do about unexpected or sudden final illness and death, there are lots of steps you can take to minimise the tax bill your loved ones will have to pay when you are gone.

With inheritance tax planning, you can reduce the tax burden and ensure that your assets are passed on to your loved ones efficiently.

What Is Inheritance Tax Planning?

Many people mistakenly see inheritance tax planning as filing tax returns when someone dies to pay inheritance tax. However, that is not all there is to it.

If all your hard-earned assets are lost to inheritance tax, your loved ones won’t be able to enjoy the legacy you left them. But, inheritance tax planning can give your loved ones the best chance of sustaining the legacy you left for them and future generations.

Inheritance tax planning is a process of reducing the tax burden on your loved ones. You can take steps to lower the amount of tax payable when you pass away, as well as the expenses associated with acquiring and administering your estate.

In some cases, there is no inheritance tax to be paid if:

• Your estate is below the threshold limit;
• You leave assets to charity; or
• You leave everything above the threshold to your child or spouse.

Difference of Inheritance Tax and Estate Tax

The most common mistake people make is confusing inheritance tax and estate tax. Although they are both similar, they are not the same.

The beneficiaries of your estate pay inheritance tax. This tax is based on the value of your assets after you die, and it is calculated using your estate’s net worth.

Estate tax is different—it is a tax imposed on your estate before it is given to your beneficiaries. The taxes you pay to the federal government can vary depending on the tax rates set by the government and your estate’s net worth.

How to Get Started

When you are starting to learn more about inheritance tax planning and tax planning, know that it can be confusing. To get started, thoroughly research the various types of tax planning to maximise your estate. Learn about wills and estate planning. Sit down with your attorney to create an estate plan.

When you are ready to start your estate planning journey, it is essential to enlist the help of an experienced attorney to begin planning for your legacy. By working with a professional, you can ensure that your loved ones will be able to enjoy your legacy for generations to come.

Conclusion

When thinking of leaving your assets to your loved ones, make sure to plan for inheritance tax. With proper planning, you can reduce the tax burden that your loved ones will have to pay when your assets are finally given away.

Let our team at Wills and Probate help you with inheritance tax planning! With our help, you can effectively plan, save on a lot of money, and ensure that your beneficiaries benefit from your assets. Connect with us today to get started.