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CHAPTER 8


arranged marriages to families of wealth and influence. Often both. If this is not your style, how are you going to preserve your family’s dynasty? It all comes down to planning and financial efficiency. So, not that different, after all. What is absolutely certain, however, is that it won’t just happen by itself unless you overturn the odds on the weekly lottery (about one chance in 14 million) and bag yourself a large windfall. If you don’t fancy those odds, let’s get planning!


Be assured, effective planning is not just for Lords and Ladies. Today’s house prices and other savings are at such a level that many ‘average’ families are holding assets with a value considerably above the Inheritance Tax (IHT) nil rate threshold of £325,000 for a single person and £650,000 for a married couple (if you are widowed, it is up to £650,000 depending upon how much allowance was used when your partner passed away). Your estate could be liable to 40 per cent tax on everything above the threshold, a bill which could be avoided but one your loved ones will have to pay before they can inherit what you want them to have.


The longer you put this off, the fewer options will be open to you.


The longer you put this off, the fewer options will be open to you. Assets can be gifted to beneficiaries before the donor’s death. This can prove extremely


tax efficient, as assets gifted away are treated as fully outside of the donor’s estate seven years after the gift has been made. If the donor dies within three years, the full IHT is payable with a sliding reduction of IHT between the third and seventh years. Additionally, there are several categories of IHT exempt gifts, including annual gifts totalling £3,000 (and for prior tax year if not already made), gifts from ‘normal expenditure’ (such as a regular pattern of expenditure from surplus income rather than capital) and gifts in respect of marriage (£5,000 from each parent of the couple).


Although there is rather more to it than just planning to avoid IHT. If you want to ensure your assets reach your children, grandchildren and other relatives you need to consider what some call bloodline planning, which ensures that your wealth and assets remains within your family bloodline regardless of unforeseen events in the future. Bloodline planning is a formal way to ensure long term protection for your family, although many people haven’t even heard of it, and assume their will will protect their family, but this is not always the case.


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