subject: Why you need a Nil Rate Band Discretionary Trust Will [print this page] Why you need a Nil Rate Band Discretionary Trust Will
In the immortal words of Benjamin Franklin:
"There is nothing certain in this world, save for death and taxes".
With that in mind then, many people seem to be of the view that the HMRC (Her Majesty's Revenue and Customs, AKA the "tax man") is an avaricious organisation that will happily rely upon litigation and court legal action to extort further money from them. Imagine their surprise then when they are informed that not only are there a lot of different ways to save money and reduce your overall tax liability bill, but, best of all, these methods are entirely legal!
With the murky and sometimes rather bewildering world of UK tax legislation, it is all too easy to find yourself drowning in a rather unfortunate mess of misleading rules, complicated formulas and exceptions to the exceptions. One common bone of contention is the difficulty in distinguishing between "tax evasion" (a criminal offence as it means that the taxpayer is seeking to avoid paying tax at all by relying on criminal methods) and "tax avoidance" (the reliance upon legal loopholes to legally reduce a tax liability).
With that in mind then, one of the most directly efficient and powerful methods of tax avoidance that exists in this current period of time is without a doubt, creating a Nil Rate Band Discretionary Trust Will.
Specifically, any transfers of assets including property and or money will be fully exempt from the provisions of Inheritance Tax and as a direct result of that then, this means that there will never be an Inheritance Tax liability whenever the first spouse to the marriage dies. However, it is worth noting that the surviving spouse, who will receive the full value of the estate of the deceased spouse, will be liable for 40% Inheritance Tax if the total value of their assets (including the previously tax exempt transfer) exceeds the legal threshold of ?650,000.
One of the major benefits of a Nil Rate Band Discretionary Trust Will is that the surviving spouse can make full use of interest free loans which are secured against the value of their current estate. The reason this is of benefit is due to the fact that they are able to legally reduce the value of their estate for taxation purposes. In addition, the Nil Rate Band Discretionary Trust Will does provide the surviving spouse with a very substantial degree of protection from the ravages of bankruptcy.
