You need to think about life insurance and inheritance tax in your Will in Colchester and throughout Essex if you want to leave extra financial support behind for your loves ones at the time of your passing.
However, without the right precautions in place, a percentage of your life insurance payout could go to the taxman instead of those who you intended to benefit. This is because in the event that your estate in areas including Colchester is found to be worth more than £325,000 then Inheritance Tax will be charged on every penny over the £325,000 threshold at a whopping 40%!
Of course, you may argue that Inheritance Tax is not something for you to worry about. However, you would be wrong. The reality is that if house prices continue to escalate in locations throughout the UK including Colchester and the threshold for Inheritance Tax remains the same then it is possible that the 40% rate of tax could be levied against your estate at the time of your death.
Nevertheless, despite the fact that the people you want to benefit from your life insurance payout could lose a significant percentage of that amount to the taxman, Legal & General found in a recent survey more than 90% of their life insurance policy holders had done nothing to safeguard their policies against Inheritance Tax. As a result, it is perhaps little wonder that Unbiased found in separate research that approximately £530 million is paid out in Inheritance Tax from the proceeds of life insurance policies year-on-year to the taxman.
Arguably, the problems in this regard are even worse if you are part of an unmarried couple in locations like Colchester. This is because they do not benefit from the same tax allowances that apply to spouses and civil partners (i.e. the Inheritance Tax threshold is doubled from £325,000 to £650,000).
However, the reality is such problems can actually be easily resolved.
All you have to do is write your life insurance policy into trust as opposed to having its proceeds directly paid to one or more individuals. By having the proceeds of your life insurance policy paid into truest, this means they will be paid to trustees so they do not form part of your estate and are thus not included in any calculation made for the purposes of Inheritance Tax in areas including Colchester.
In addition, if you have your life policy written into trust then the proceeds will not need to go through probate so the beneficiaries will then be likely to receive their payments significantly quicker.
Contact Andrew Douglas Wills and Legal Services today via www.andrewdouglaswills.co.uk if you would like help with writing your life insurance policy into trust and inheritance tax under the terms of your Will in Colchester and other locations throughout Essex.
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