The short version: Your estate is everything you own when you die. Property, savings, investments, possessions, businesses. It’s what gets passed on to the people in your will (or according to intestacy rules if you don’t have one).
What counts as part of your estate?
Pretty much everything of value. Your home, car, bank accounts, shares, jewellery, art, even things like life insurance payouts (unless written in trust). Debts get deducted, so if you have a mortgage or credit card balance, that reduces the estate’s value.
When is Inheritance Tax due?
There’s a threshold below which no IHT is payable. If your estate is worth less than that, your beneficiaries won’t owe anything. Above the threshold, IHT is charged at a set rate on the excess.
There are ways to increase the threshold, like leaving your home to direct descendants or passing everything to a spouse or civil partner. Gifts to charity can also reduce the bill.
How do you plan for it?
Making a will is the first step. Beyond that, you might consider putting assets in trust, making gifts during your lifetime, or taking out life insurance to cover any IHT bill. Planning ahead can save your family a lot of hassle and money.
Want to understand how Inheritance Tax might affect your estate? Let’s have a conversation about planning ahead.
