Introduction
This article is one of a set about wills. It explains just some of the many strategies that you can implement to maximise your well earned life’s work by retaining your assets. Below are headings to give you some ideas:
Skipping a generation
If your children are wealthy, consider skipping a generation. Instead of leaving gifts your children, leaving the gifts to or for the benefit of your grandchildren. This will avoid the income tax bracket from jumping up t the next level when your children pass. Thus, your gift is only taxed once instead of twice before the grandchildren inherit it.
There is an additional benefit in skipping a generation if the grandchildren inherit before they become of age. This is because if capital transferred to a child by a parent earns income in excess of £100 in any tax year, the income is taxed as if it were the parent's income, but income earned by capital transferred by a grandparent is treated as the grandchild's own income irrespective of the amount of the income, and if it does not bring the grandchild's income above the grandchild's personal income tax allowance, any income tax deducted from the income can be recovered on behalf of the child.
Gifts to spouse
You might have heard to “Give assets to your spouse, so that no IHT is payable”. Possibly a good idea - but the line here is blurred. If your assets are likely to grow in value, it may be better to have the benefit of that growth accumulate in the hands of beneficiaries, even if some tax becomes due on your death. However, you may want to give assets to your spouse for far better reasons than to save tax!
Use exemptions and allowances
There are many government strategies that can help – they just need a little research. Use them to your best advantage. There is little consequence in trying to re-arrange your life around some smart, rather cheeky idea, when the Government actually allows you to reduce your IHT bill in particular ways.
Beware the capital gains tax trap!
A transfer of assets on death is not a “chargeable event” for CGT purposes. That means no tax is paid on your assets when you die. Instead, your own “base value” (the value when you acquired them) is attributed to your heirs. The result is that when they sell, there may be a big bill for CGT!
Use a determined valuer
One good way to minimise the IHT bill on your death is to choose executors who will not roll over to have their tummy tickled when the District Valuer places a value on any real property sold or transferred out of your estate. So choose wisely. District valuers profess to be neutral, but when it is your money they are taking, it pays to fight for the value you want.
Consider the 2 year discretionary trust
Where the testator wishes to give their beneficiaries maximum flexibility in the way in which their estate is distributed, it is not uncommon to see the whole estate, or at least an amount equivalent to the nil-rate band, left on discretionary trusts. Where the trustees subsequently make a distribution of the trust property, the law operates as if the will had provided that the on the testator's death, the property had passed according to the distribution.
A power of appointment under a will is vested in the executors/trustees as from the death, and is exercisable over all residue, whether ascertained or not, unless, as a matter of construction, the will clearly demonstrates a contrary intention.
Consider nil rate band discretionary trust
If you give money or other assets up to, but not over the nil rate band current at the date of your death (and of course now unknown to any of us), no IHT will be payable on that gift. Of course, the rest of your will has to drawn carefully to make sure it is this chunk of your estate that carries the full benefit of the nil rate band, and not some other part.
The benefit of this is that your discretionary trustees can accumulate assets in the trust at far lower tax rates than the beneficiaries would themselves pay if the assets were in their hands. If for example, an NRB trust was created by your will, leaving only assets you specifically wanted to leave to your spouse, then no IHT would be payable on your estate at all.
A god way of guiding your trustees as to your wishes is by an informal letter of instruction in which you set out what sums you would wish to be given to whom and when. Of course, it is always a mistake to try to plan your business from your grave in too much detail.
Deferred valuations generally
The District Value is a branch of Revenue and Customs. It is staffed by professional valuers with the same training as property valuers in the private sector. When you submit any form to Revenue and Customs which involves a statement of the value of real property, they will pass it to the DV’s office to agree (or disagree) the valuation you have made. You have no obligation to declare values or have valuations made when such a valuation does not affect the tax due.
However, the more distant is time is the relevant date applicable to a valuation, the more the figure is estimated. So, briefly, the use of a trust may generally defer valuations, and so provide more “flexibility” when the time to agree figures comes around. | 
