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Inheritance tax, no change is likely until 2020 and beyond

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Although the Chancellor has set in motion a review of inheritance tax there seems little chance of any reforms being enacted in the near future.  Any worthwhile reform will be controversial and the government’s obsession with Brexit and its lack of a working majority are pretty much guarantees that any recommendations, which might come out at a review, will sit in the long grass.

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Deed of variation – not just to save inheritance tax

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The usual reason for entering into a deed varying a will within 2 years of death, is to secure an inheritance tax reduction or to skip a generation so that a gift is removed from an affluent beneficiary and diverted to his impecunious children.

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Ken Dodd – tax efficient to the last

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No-one can avoid death or taxes but Ken Dodd at least managed to minimize the latter in his final days.  The key of course was marrying his long-time partner and instantly getting the benefit of total exemption from inheritance tax as a result of the spouse exemption.  He would of course have had to make a will immediately after the marriage, or may be just before but in contemplation of the marriage, because otherwise Ken’s late entry into matrimony would have cancelled any previous wills, even if they were in favour of the partner.

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The latest on the residential nil-rate band

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According to press reports it seems a strong possibility that certain estates have not been claiming this extra inheritance tax allowance which applies when residential property is left to the children (including step-children and adopted children) and to grandchildren or other direct descendants.  The provisions governing its application are complex.  Possibly those administering estates themselves without expert assistance are missing out. 

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Executors – don’t forget to investigate gifts

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Most people know that if you fail to survive a gift by 7 years it will form part of your estate.  It is likely that banks will co-operate with HMRC if the tax men are suspicious about whether gifts have been properly declared.  An investigation could follow that will be uncomfortable for executors and could mean additional tax and fines as well. 

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