Avoiding Inheritance Tax

Strategies to Avoid Inheritance Tax

Inheritance tax is a form of taxation that the government forces on property passed from one generation to another. The goal is to ensure fairness, but it can be confusing when you have no idea how much you will receive or your inheritance tax rate. This article discusses some ways to avoid this sometimes harmful tax, & hopefully, save yourself some money in the process!
How Does an IFISA Work

You might be wondering:

Can you avoid inheritance tax?

It depends on the type of property you are inheriting and your relationship with the person passing it down. If you inherit a house from your parents, for example, then inheritance tax1 will not apply because homes are exempted from this form of taxation in many cases.

It also does not matter if they live there or sold it before their death; as long as you received title to the home at some point after 2010 without having paid any taxes on its sale- that’s what counts!

Make Gifts

Let’s start!

This is the most common way of avoiding inheritance tax, but it does not always work because you can’t give away more than $14,000 a year without triggering other taxes.

For married couples who are both looking at sizable inheritances as well- certain types of inherited property count double when deciding how much should have been gifted. Therefore, one solution is to make sure you don’t exceed these limits by splitting up unlimited gifts with loved ones or giving out lifetime gifts

Leave Money to a Charity

This is a great way to avoid inheritance tax as long as you’re using the correct type of charity. You have two options: defined benefit or define contribution charities. Represented benefit charities say what they will give beneficiaries

Leave Your Estate to Your Spouse

For a spouse to inherit without paying taxes, the inheritance tax must be 11.18 million dollars or less (2007).

This is called an “exclusion,” meaning that your heirs won’t have to pay any tax on anything over this amount.


If you want more than one person as heir, make sure they are spouses or children from previous marriages. If you leave more than one child from the same wedding, then there will still be some taxable estate due- even if your total amounts of money left after death don’t exceed the exclusion limit

Use Property Allowances

There are two ways to use property allowances: Leave some assets out of the taxable estate and give them away during life. Second, establish a type of trust, which does not have to be distributed until after you die. But this requires legal assistance.

You see:

If you do not use property allowances, we risk giving away all the help to avoid taxes. To prevent this, it is necessary that your heirs-to-be give up some of their inheritance during life with cash gifts or heritage, and these may be subject to estate tax as well.

Consider Equity Release

Some people worried about paying the inheritance tax when they die may want to consider taking out a loan or using equity release on their property.

In addition to that,

Reverse mortgages can also be used if you don’t have any other estate assets- a house with some equity in it and no mortgage that could serve as collateral for the loan. This might seem like an easy way out at first, but please make sure that you will need this before signing anything!

Consult A Specialist

The property owner may want to consult a specialist before making any final decisions. A good estate lawyer can help you plan your will and other legal documents so that they protect the person who inherits your assets while also avoiding inheritance taxes. Most importantly, an inheritance tax specialist advice is there to advise on how best to avoid paying too much in inheritance tax- only if it’s possible for them!

Take Out A Life Insurance Policy

A life insurance policy is a contract that pays the beneficiary a sum of money after you die, as long as certain conditions were met.

The person who inherits your assets may not have enough money to pay for the inheritance tax when it comes due. That’s where life insurance can come in handy!

Consider a ‘Deed of Variation’

A deed of variation2 is a legal document that sets out how the estate should be distributed. For example, suppose you have children, grandchildren, or other relatives who would benefit from an inheritance but are not entitled to it in your will because you haven’t left them anything in writing. In that case, this could come into play and help avoid any disputes over what’s rightfully theirs when the time comes.

Common Questions

How to Legally Avoid Paying Inheritance Tax?

How Does Inheritance Tax in the UK Work?

Can I Give an Inheritance to Someone Else?

Why Is a Gift or Inheritance Not Subjected or Excluded From Gross Income?

In Conclusion

In short,

Inheritance tax is a huge expense that many people don’t anticipate when they are planning for their future. However, there are some things you can do to avoid this major expense and protect your family’s assets.


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