Leaving your assets, who gets what?
If you leave everything to your husband, wife or civil partner, in this instance there usually won’t be any Inheritance Tax to pay because a husband, wife or civil partner counts as an ‘exempt beneficiary’. But bear in mind that their estate will be worth more when they die, so more Inheritance Tax may have to be paid then.
However, if you are domiciled (have your permanent home) in the UK when you die but your spouse or civil partner isn’t, you can only leave them £55,000 tax-free.
Other beneficiaries
You can leave up to £325,000 tax-free to anyone in your will, not just your spouse or civil partner (2010/11). So you could, for example, give some of your estate to someone else or a family trust. Inheritance Tax is then payable at 40 per cent on any amount you leave above this.
UK Charities
Inheritance Tax isn’t payable on any money or assets you leave to a registered UK charity – these transfers are exempt.
Wills, trusts and financial planning
As well as making a will, you can use a family trust to pass on your assets in the way you want to. You can provide in your will for specific assets to pass into a trust or for a trust to start once the estate is finalised. You can also use a trust to look after assets you want to pass on to beneficiaries who can’t immediately manage their own affairs (either because of their age or a disability).
You can use different types of family trust depending on what you want to do and the circumstances. If you are planning to set up a trust you should receive specialist advice. If you expect the trust to be liable to tax on income or gains you need to inform HM Revenue & Customs Trusts as soon as the trust is set-up. For most types of trust, there will be an immediate Inheritance Tax charge if the transfer takes you above the Inheritance Tax threshold. There will also be Inheritance Tax charges when assets leave the trust.