"In this world nothing can be said to be certain, except death and taxes" Benjamin Franklyn, letter to Jean Baptiste Le Roy(1789)
If you do not have a Will, the chances of you leaving a legacy in your estate to the Chancellor will be greatly increased. Last year alone the government collected over £4 billion in Inheritance Tax.
We all pay taxes in many ways, VAT, road tax, council tax and of course income tax. We also pay tax duties on things like fuel, cigarettes and alcohol.
Another type of tax which now effects more people than ever is Inheritance Tax.
Inhertiance Tax is a particularly unfair tax, it is after all, a tax on cash and assets which have been built up over a lifetime from your income and investments which has already been taxed! It is also worth remembering that the only time your home becomes a taxable asset is when you die.
Not everybody will pay Inheritance Tax. We each have an allowance called the Nil Rate Band which at the moment is set at £325,000. Once your assets, including the value of your home, exceeds this figure however, a tax of 40% is applied which is paid by the person or person's you choose to inherit your estate. If you are married, you and your spouse are exempt from inheritance tax on assets transferred to each other, in the main, Inheritance Tax would normally be paid by any children or other beneficiaries following the death of both of you.
The amount of tax we pay through direct and indirect taxation is often unavoidable. However Inheritance Tax can often be avoided or considerably reduced with careful planning, beginning with a correctly worded Will.
Following the governmental review of Inheritance Tax in October 2007, many people have assumed that their worries regarding Inheritance Tax are over.
Whilst it is true to say that the measures introduced will indeed reduce the amount of tax paid by some families, the changes are not as straight forward as they first appear. In an article published by The Society of Will Writers following the changes they wrote: "...what has not been explained properly is that, although this new tax strategy might help couples who have done no planning as far as tax is concerned, either during their lifetime or via a Will, dying will become far more complicated and very much more expensive".