Inheritance Tax Insurance

How can Insurance be used to help with inheritance tax planning?

One neat way of planning for inheritance tax is to use insurance to be used to pay the bill.

Click here to download a leaflet on inheritance tax insurance.

When a person dies, if their assets are more than £312,000, then their representative will have to pay inheritance tax at 40% on the balance over this figure.

Instead of trying to reduce the value of their estate through gifts or trusts, and therefore losing control of their money, many people choose to fund for their liability using inheritance tax insurance.

This inheritance tax insurance can be a relatively simple way of ensuring that on a person's death, all their assets will pass to their beneficiaries, since a policy will pay enough to pay the tax bill.

How inheritance tax insurance works is a person will take out a policy (usually for their lifetime), which will pay out an amount roughly equal to their estimated tax bill. Obviously inheritance tax insurance is not an exact science since a person's liability can change from month to month.