Inheritance dilemma for baby boomers
(Editorial from Harrogate Advertiser)
The so-called 'inheritance generation' is now facing an inheritance dilemma of their own, according to a Harrogate solicitor.
Many people born in the post-war baby boom, now in their fifties, have been the first generation to inherit wealth because their parents had bought rather than rented, their homes.
"That inherited wealth, together with the wealth they have built up by owning homes of their own, which have risen sharply in value, now presents a dilemma – how to passit on," said Ruth Brockett of Beck Solicitors in Victoria Avenue, Harrogate.
When the first partner in a marriage dies, there is no inheritance tax to pay on assets given in their will to the survivor. But when the widow or widower dies, inheritance tax bites above £263,000.
All assets, including investments, the value of the home (less any mortgage), life insurance and any death-in-service lump sum benefit, is taxed at 40p in the £1 above this figure.
Mrs Brockett, who specialises in wills and probate issues, said: "Once inheritance tax was only a nightmare for the seriously wealthy but now it's causing sleepless nights in Acacia Avenue too."
"That is largely because of the inherited wealth and also the rapid rise in house prices. Seven years ago only one town in the UK had average prices above the inheritance tax threshold. Today, there are 86 towns with average house prices above £236,000."
Inheritance tax, added Mrs Brockett, was also in danger of becoming a political football, causing more uncertainty about which way it would be kicked in the run-up to the next election.
The Insitute for Public Policy Research has suggested replacing the 40% band with a 22% band for estates between £236,000 and £288,000. It proposes a 40% band between £288,000 and £763,000.
"No one can know for certain the way inheritance tax is going to go," stated Mrs Brockett, "but, if you are seriously concerned about passing wealth to your children, rather than the taxman, re-drawing of your will can often help. A solicitor, experienced in inheritance tax provisions, can assist you to resolve the inheritance dilemma, guiding you through the steps you need to consider to take advantage of what the law entitles you to do."
Issued by Tony Whiting of Tony Whiting Public Relations, The Stables, Swinton Park, Masham, North Yorkshire HG4 4EG. Telephone: 01765 68800.