Avoid the pitfalls of inheritance tax

New inheritance tax rules announced last October, allowing the transfer of unused allowances between spouses and civil partners on the first death, bring new pitfalls to watch when considering your will.

New inheritance tax rules announced last October, allowing the transfer of unused allowances between spouses and civil partners on the first death, should not lull you into a "false sense of security", says Harriet Meyer in The Daily Telegraph. There are new pitfalls to watch when considering your will.

One is a common form of tax avoidance known as "nil-rate band discretionary trusts", which may need rewriting to make sure your heirs are not worse off than if you had not set up a trust at all. Under the new rules, if the first spouse dies now, when the nil-rate band is £312,000, but the second dies in a few years' time, when it rises to £400,000, the first spouse's use of a nil-rate band trust would result in a total tax-free allowance of £712,000.

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