If you have just received a large capital sum, it will also be important to consider the potential effects of Inheritance Tax on your estate. Currently inheritance tax will apply if your total assets including your home amounts to over £312,000 (increasing gradually each year to £350,000 in the 2010 – 2011 tax year, as announced in the 2007 Budget).

In certain circumstances, it may be appropriate for part or all of your portfolio to be held in a trust, which can be favourable for your tax position as well as increasing the amount that potentially will pass to your next of kin.

We have access to a range of specialised trust arrangements for this purpose (see section on Inheritance Trusts).

However, when considering IHT and estate planning it is important to firstly take advantage of the basic planning options available to you:

Make sure you have an up to date will and have taken specialist advice:
Ask your solicitor about ‘nil rate band discretionary trusts’ which may be of use in certain circumstances.
Use your exemptions: Annual gift exemption £3,000 p.a. per spouse. ‘Gifts out of normal expenditure’ (gifting income)
Marriage gifts Small gifts £250 p.a. each beneficiary Make Potentially Exempt Transfers (PETs).*

For further information please ask for our leaflet ‘A Guide to Inheritance Tax’.

Certain transfers of capital either direct to the recipient or into a trust will be exempt from IHT if you live 7 years.