To avoid inheritance tax, timing is key.
In the summer of the year before last, I caught up with my old friend, the comic Jan Jack. Our conversation, going that way then this, touched on several talents in the comedy firmament.
In 2012, Florida’s laws made it illegal to prohibit carrying concealed guns. Relating to some nonsense they [in error] call their second amendment rights. At the same time they had rules proscribing the use of water pistols.
This is the manner of upside-down thinking on which inheritance tax rules are founded.
In short, many can avoid inheritance tax, but it takes some effort, it takes some skill, and it takes some planning.
It is not unlike the ‘logic’ born of the then government’s panic at their predicted electoral misfortunes that birthed the transferable nil rate band (TNRB). Like me, those who knew of what they spake said TNRB merely deferred the pain of inheritance tax till the death of the second party of the marriage.
“And, and, what if, they were a couple who lived together, but weren’t married to each other, how would they use the same rules to avoid inheritance tax?” I hear you ask in these enlightened times.
Avoid Inheritance Tax: Like Ken Dodd?
Like most, I like a good laugh, but Ken Dodds’s manner of humour passed me by. No matter.
I felt nothing one way or the other when in the summer of 1989 the Inland Revenue, as then they were known, hauled him before the courts on tax evasion charges.
When Ken Dodd died in the winter of 2018, sub-editors, of both the newspapers with pretensions to literary sophistication and those of lesser standing – and even several trade publications –rolled out the puns. You know the sort, something to the effect of having the last laugh on the taxman: avoid inheritance tax the Ken Dodd way.
To Avoid Inheritance Tax: Timing is Everything
Beyond the headlines, the obituarists held consistent on two facts. In the first, he died in the house in which he was born more than 90 years before. Second, and more important to our purpose, he married his partner of 40 years, Ann Jones, two days before his death.
By his will he’d left everything to Miss Jones. Mr Dodds’s estate would otherwise have been subject to inheritance tax.
At this remove, I’d wager the taxman’s pound of flesh would have been of the order of £2,700,000. But following their marriage, Ann Jones paid zero in inheritance tax. The thing with that sort of planning, for what it’s worth, is that it presupposes the new Mrs Dodd would live forever.
I say, on the face of it, the inheritance tax bill was merely deferred till her death. Marriage notwithstanding, inheritance tax persists.
Many have buy-to-let portfolios. Such portfolios imply inheritance tax on death.
Many have heard of the seven-year clock. If you make a gift, and survive the gift by seven years, it falls outside your estate for the purpose of inheritance tax. With some carelessness, the clock might in fact be 14 years, not seven.
Our tax laws, ne’er you forget, might as well have been set up to defeat essential justice, sneer at logic and defy common sense.
I only tell it like I see it.
As we don’t know when we will die, it is difficult to be able to work back to when seven years before death would be. Just like in comedy, timing is everything.
But, you can eliminate the need for such ghoulish timing and frustrate the evil intentions of those who wish to part your family from its wealth.
You can avoid inheritance tax, just, ask me how.