Any Inheritance Tax liability must to be paid prior to your estate obtaining the grant of probate and being distributed.

This may mean assets (such as property or stocks and shares of investments) have to be sold to meet the Inheritance Tax liability.

Your taxable estate includes:

  • all your assets (real estate and personal estate) including small-value items such as your home contents;
  • any gifts you made in the 7 years before death;
  • assets which are affected by your death but not owned by you (e.g. life interest in a trust);
  • gifts with reservation of benefit. (Where legal ownership passes to a recipient but you have continued to enjoy the benefit of it at low or no cost). The 7 year period outlined above does not begin counting down whilst a gift is considered to be under a reservation of benefit.

When writing your Will, it is important to ensure that all reliefs and allowances have been used and any planning such as a Deed of Variation and setting up of trusts has been done.