An inheritance tax loophole can save married couples thousands of pounds, according to a leading legal firm.
The firm says that married couples with more than £500,000 in assets can save money into a trust, using onshore cash and investments, to escape inheritance tax.
Once the trust is created, one spouse gives their assets to their partner. After seven years, provided the spouse holding the assets is still alive, the couple's estate is free of the 40% inheritance tax liability usually imposed.
This arrangement also allows husband and wife to be included among the trustees, unlike most other trusts. Should the need arise, they can use their discretion to pass back assets to either spouse.
One main difference is that the married couple does not need to invest the money immediately. They can transfer existing investments into the trust and still get access to the money. However, some people in the industry feel that the chancellor will try to close the loophole, possibly in the November budget.
Clerical Medical offers its Family Wealth Trust, which operates under a similar arrangement, and is intended for people investing more than £100,000 in offshore bonds. How much would your inheritance bill be?
Try our unique Inheritance Tax Calculator .For more ideas on Inheritance Tax visit the Inheritance Adviser.com.Would you like a copy of a factsheet on Will trusts? Another unique way to save up to £100,000 in inheritance tax. Contact us.