Five Routes to cut IHT costs
The following are ways to ensure more of your estate ends up where you want it to be:
Gifts. There are certain gifts that you can make which are immediately out of your estate for IHT purposes. Other gifts can be made but you need to survive seven years for these to be fully exempt.
Trusts. Discretionary trusts are often used to hold cash property or investments for the good of one or more beneficiaries. You will need a solicitor to set up the trust and advise on the IHT implications.
Whole-of-life policies. This is a life policy which pays out on the death of the policyholder. The idea is that the policy pays out enough to cover the IHT liability. Any policy should be written in trust.
Business Property Relief. This allows shares in certain companies and other assets used in business to be passed on IHT free.
Giving to charity. If you leave 10% or more of your net estate to charity you will pay IHT at the rate of 36% instead of the usual 40%.