Trust wills 'protect' private wealth from inheritance tax

Private wealth could be protected from state levies on the event of an individual's death by the use of testament and life assurance policy trustees, it has been claimed.

Citywire.co.uk reports allowing assets to be held in trust can help people mitigate the costs of inheritance tax, as the proceeds of wills written in this way are not included in the settler's estate and so do not fall under the levy.

Recent changes to pensions tax relief could have affected private wealth, with the annual allowance for tax-privileged retirement saving cut from £255,000 to £50,000 as of April 2011.

The lifetime allowance has also been dropped to £1.5 million from £1.8 million, a move the government hopes will raise revenues of £4 billion per annum.

Inheritance tax still applies to certain assets, with premium payments on a life insurance policy treated as gifts, but nevertheless the move may maximise the amount of private wealth passed on to family and loved ones. ADNFCR-2318-ID-800126199-ADNFCR