Properties into Trusts
Inheritance tax is currently levied at 40% on the value of an estate above the tax-free threshold, which has been frozen at £325,000 per person since 2009. The average house price in London is around £600,000 for a semi-detached property so a huge number of residents, especially single people, will need to consider inheritance tax as part of planning their will or estate. Tax charges are triggered at £650,000 for married couples or civil partners but that still doesn’t allow for many assets on top of the average family home.
While the government has promised to extend the tax free allowance and add a family home allowance, the limits mean that many London families lose a substantial amount of family assets through inheritance taxation.
Benefits of including Real Estate in Your Trust
- Avoiding probate costs and delays – this is the primary consideration for most people putting their properties into trusts
- Incapacity protection – if you become ill or require care, your appointed trustee will be able to protect your home
- Avoid inheritance tax
Additional Safeguarding Through Trusts
Adding your investment property to a trust means that you can retain control of who benefits from the use/sale of the property, as well as safeguarding assets. Rental income from the property can be put into a trust specifically for school fees to fund your family’s education.
Rising property prices mean that investment properties are also subject to large capital gains taxes – particularly if they were bought more than 5-10 years ago. A trust mitigates a range of tax liabilities as well as providing flexibility with taxation, not just inheritance, and ensures that you can preserve all of the wealth your family is entitled to.