inheritance tax

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inheritance tax

broadly, a tax on wealth transfers i.e. gifts made in lifetime or on death. The main charge is on everything beneficially owned at death, including property in which the deceased had an INTEREST IN POSSESSION. To prevent deathbed gifts being used to avoid the tax, gifts made within seven years of death are also charged but are POTENTIALLY EXEMPT TRANSFERs (PET) in the meantime. However, some lifetime gifts are immediately chargeable if the assets are transferred into certain types of discretionary trust. Whilst within such trusts and on exiting them, the assets are liable to a special regime of inheritance tax. The territorial scope of the tax is determined by the domicile of the individual. Those who are domiciled in the UK are chargeable on their worldwide assets and those who are not on assets situated in the UK. The value chargeable may be reduced by AGRICULTURAL PROPERTY RELIEF or BUSINESS PROPERTY RELIEF. Exemptions can apply for small gifts, maintenance payments, wedding gifts, gifts to charities and national museums and certain other bodies. Some of these exemptions have monetary limits. There is a taxable threshold below which the rate is zero. Earlier gifts obtain the benefit of this threshold before later gifts. In determining the tax on the assets held at death, a deduction is allowed for funeral expenses and debts outstanding, including any unpaid taxes. The primary responsibility for paying the tax relating to a lifetime gift which has become chargeable falls upon the recipient. Tax payable on the estate of the deceased is primarily payable by the executors, except to the extent of any tax relating to property held in a trust in which the deceased had an interest in possession, which is payable from the assets of that trust. It is possible to vary an inheritance after the death if all the beneficiaries who would inherit less as a result of the change so agree. This can result in significant reductions in the inheritance tax liability. However, the variation must be made within two years of the death and the instrument of variation must state that it is to take effect for inheritance tax purposes. Any inheritance tax is calculated as if the variation was effectively backdated to the date of death. A similar provision can be applied for CAPITAL GAINS TAX.
Collins Dictionary of Law © W.J. Stewart, 2006
References in periodicals archive ?
2010) (domestic corporate shares, i.e., in Citigroup, subjected to estate taxation on demise of nondomiciliary alien).
According to Egyptian Finance Minister Hany Demian, the protocol aims to reach a clear mechanism to allocate part of real estate taxation returns in favour of each governorate in Egypt as well as of the Ministry of Cultural Development.
Potential sale of the business, potential purchase of another business with purchased patents, actual sale or purchase of a previously purchased patent, divorce actions, estate taxation, gifting, bankruptcy actions, and tort actions are such examples.
Wealth replacement strategy using life insurance: Individuals with taxable estates may wish to increase assets given to individual beneficiaries when they die, reduce estate taxation at death, receive current income tax benefits and make a significant gift to charity at death.
Does the estate taxation of a life insurance policy that insures more than one life differ from the taxation of a policy that insures a single life?
He brings his study into a lengthy discussion of the Bush tax cuts in 2001 which, probably only temporarily, ended all estate taxation. One of the more fascinating qualities of the discussion of inheritance laws in any of the three countries is that not until the 1970s did economic considerations, in the guise of economic growth, play a significant role in the deliberations.
These trusts are commonly used in estate planning to avoid estate taxation on death proceeds, to shelter property from creditors and protect survivor income.
* increased depreciation and real estate taxation expenses relating to the church's national office at 80 Hayden St.; and
From an economist's point of view, estate taxation touches on a wide array of important topics.
Mertens, Law of Federal Gift and Estate Taxation (New York, NY: Lofit Publications, Inc.).
One tool often overlooked in this regard, however, is the irrevocable third-party trust (TPT), which combines the benefits of owning assets and possibly conducting a business, without the drawbacks of estate taxation and accessibility by creditors.
According to marketing and research organization Limra International, survivorship sales rose 19% in 2004, the fourth year that a 2001 law has been lowering estate tax rates and raising amounts of family assets exempt from estate taxation. The sales increase reverses sales declines of about 26% in 2001 and 11% in 2002, and it builds upon a 1% increase in 2003.