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Scottish Death Duty - Inheritance Tax Scotland
Scottish Inheritance Tax:
Are you planning to write a will in Scotland? Then don't forget to plan for inheritance tax (death duty). Estate planning is more than just preparing a will. There are numerous other steps a solicitor can help you take to see to it that your assets are distributed according to your wishes, which can include taking certain actions while you're still alive. In Scotland (and indeed the whole of the United Kingdom), an inheritance tax (IHT) rate of 40% applies if you leave behind an estate valued over the current allowance subject to certain exemptions. Death duty can quickly eat away your estate, leaving your family with much less than you intended. You can, however, greatly reduce and even avoid all together, the tax burden on your estate with careful planning and the advice of a qualified Scottish solicitor.
Determining the Value of Your Assets:
With tax planning in Scotland, the first step is to calculate the approximate total value of your assets. You'll need this number in order to assess the potential inheritance tax liabilities on your estate. That way you'll be able to start taking steps to minimize the death duty burden well in advance. When assessing the total value of your assets, you must factor in everything you own, including company and service benefits. At this point, you should also give careful consideration to where you would like your money and other assets to go after you pass away. You can then evaluate whether or not those are the most tax efficient decisions. In some cases, making a gift of a particular item while you're alive is a better choice than bequeathing it in your will.
Does the UK Have a Gift Tax?:
Currently the United Kingdom, including Scotland does not impose a gift tax, which is a tax on monetary gifts you bestow on others. This does not mean, however, that every gift will be tax-free. Depending on when you make a gift, it could be liable for the inheritance tax. Death duty applies if you make a gift to someone within seven years of your death. So, for instance, if you were to give a gift of money to your niece tomorrow and die six years later, the inheritance tax would be applied to that gift. The good news is that lifetime gifts are only one way to avoid the inheritance tax. There is also the tax free marriage gift and the annual gift allowance to consider when planning your estate. When you hire an experienced Scottish solicitor to prepare your will, you're ensuring that your loved ones, and not the taxman, will receive most of your assets.
Using a Deed of Variation:
Solicitors who specialise in wills are familiar with the various techniques for reducing death duty. One such technique is to use a deed of variation, which is also sometimes referred to as a deed of family arrangement. If you plan to leave all of your assets to your surviving spouse, you can use a deed of variation to greatly reduce the amount of inheritance tax due after that spouse dies. A deed of variation provides your spouse with a period of two years in which to reallocate the assets in a way that is more efficient for tax purposes.
Free Legal Advice Now:
Our panel solicitors know that you want the bulk of your estate to go to the people you love. That's why it's so important for you to seek the guidance of a knowledgeable and experienced solicitor. Our panel of solicitors provide initial free, no obligation legal advice. All you have to do is fill out the contact form or call our helpline. One of our panel solicitors will be in touch to advise you on your case. Your free initial consultation in no way creates any further obligation.