Life doesn’t come with a guarantee. You never know when you take your last breath. In that case, it is important that you save something and leave some sufficient resources for the loved ones left behind when you’re no more. People, however, save a lot of amount for their spouses and children but then the lack of knowledge about the inheritance tax make their family pay after their death.
Here are some facts that necessarily need to be known to you so that you make your family know about the same clearly.
- Fact 1: The due amount of inheritance tax
When you leave a sum behind after your death for your family, the members will require paying the inheritance tax for having the amount. If the amount left is more than a certain limit, a tax rate is applicable to it.
You must know about it and make your family aware of the same. In case you miss to mention this point, the taxmen may take advantage of the lack of knowledge and lead them to lose a huge amount from the total sum. Making your family members know the details of your investments will mean they will make better financial arrangements for future.
- Fact 2: Reducing inheritance tax bill
The inheritance tax amount can be reduced if a portion of the sum gets invested in some charitable work or donations, etc. However, even when you’re investing to reduce your tax bills, you must be careful about how much you’re investing. Plan according to the tax rates and invest tax-efficiently. You can gift or donate, invest in multiple financial schemes, spend, get an insurance, etc. These things surely contribute to minimizing the inheritance tax bills. When you’re doing so, however, don’t forget to inform your family about the same.
- Fact 3: Pre-fund the inheritance tax
In order to do this, you can but an insurance policy through which you can pay your inheritance tax when you die based on the amount that is due. This will make sure your family doesn’t fall under any kind of financial pressure after your death. If you plan everything beforehand, you are making life easier for your spouse and children.
- Fact 4: Trust can save you the inheritance tax
When you invest in trust, it definitely saves your family from paying heavy inheritance tax but then it also preserves your family wealth. After you die, even if your business is declared bankrupt, your trust will appear to be a savior in that case.
- Fact 5: Your spouse is eligible to receive a tax-free sum
If you are leaving your spouse alone after you, she must know that she is exempted from current inheritance tax laws. This means that she will not have to pay any tax to receive the amount you have left for her. It is your duty to make her aware of the rule prior to misfortune if any occurs.
If you know the aforementioned facts about the inheritance tax, no taxman can take advantage of your death and make your family suffer after you. Hence, be sure of being aware of all the points yourself as well as make your family members know about the same. When you leave something for your family through your will, you must make sure life is easy and not complicated for them after you.