How can one reduce the inheritance tax burden?

Inheritance tax is a tax on the estate (the property, money, and possessions) of someone who has died.

Gifting assets during your lifetime can reduce the value of your estate and potentially reduce inheritance tax if the gifts are made more than seven years before your death.

Each year, you can give away up to a certain amount, known as the annual gift allowance, tax-free. In the UK, for example, this is £3,000.

Setting up a trust can help manage and protect your assets while reducing the value of your estate subject to inheritance tax.

Taking out a life insurance policy written in trust can cover the inheritance tax liability upon your death, ensuring that your beneficiaries receive more.

Gifts between spouses or civil partners are usually exempt from inheritance tax, which can significantly reduce the tax burden.

The nil-rate band is the threshold below which inheritance tax is not payable. Planning your estate to maximize this threshold can reduce tax.

Donating to charity can reduce your inheritance tax, as gifts to charities are usually tax-free, and donating a certain amount can reduce the tax rate on the rest of the estate.

Yes, regularly giving away surplus income can potentially reduce your estate's value for inheritance tax purposes, provided these gifts do not affect your standard of living.

Business property relief can reduce the value of business assets subject to inheritance tax, potentially lowering it to 0% if criteria are met.

Agricultural relief can significantly reduce or eliminate inheritance tax on certain agricultural property, provided specific conditions are met.

Joint ownership as tenants in common allows for each owner's share to potentially be smaller, thus reducing inheritance tax liabilities.

Yes, writing a will helps clearly define the distribution of assets and can incorporate strategies to reduce inheritance tax liabilities.

The residence nil-rate band is an additional threshold that can reduce inheritance tax when passing a home to direct descendants.

Pension funds are generally not considered part of the estate for inheritance tax purposes, so leaving them within a pension wrapper can avoid inheritance tax.

A deed of variation allows beneficiaries of a deceased's estate to alter the distribution of the estate, potentially reducing inheritance tax within two years of the death.

Yes, selling a larger home and giving away or investing the proceeds can reduce the value of your estate and potentially reduce inheritance tax.

Various schemes and reliefs, such as business or agricultural reliefs, are offered by governments and can be used to reduce inheritance tax.

Forming a family partnership can help distribute wealth among family members, making use of allowances and potentially reducing inheritance tax.

Consulting with a tax advisor or estate planner can provide personalized strategies to effectively reduce your inheritance tax burden, considering legal and financial implications.