Sisters IHT battle highlights need for careful planning

LEGAL experts say the case of two sisters who fought for the same inheritance tax rights as married couples and civil partners has highlighted the need for careful financial planning. Joyce and Sybil Burden have lived together all their lives but if one of them dies, the other will face an inheritance tax bill of more than £50,000 and may have to sell the family home to pay it. The sisters have been battling since 1976 for the same IHT allowances married and civil partnership couples have. They finally lost their case in the European Court of Human Rights this week. Howard Burns, wills and probate partner at national law firm Lewis Hymanson Small, says the case highlights the need to have a will in place: “The case should serve as a warning to people everywhere that they must plan now to reduce the inheritance tax burden. Everyone should have a professional will in place and examine their finances carefully. The fact the case went all the way to the European Court means it has been taken very seriously and could open the floodgates for other similar cases.” Howard Burns gives six tips for reducing your inheritance tax bill:

• Re-write your will – IHT is based on the value of your estate. You can reduce this figure by making donations
• Consider downsizing – this will release capital to pay your IHT bill
• Remember that if you survive seven years after making a gift, IHT is not payable
• Give away items which will rise in value. The increase will then benefit the receiver rather than swelling your estate
• Take advantage of other lifetime gifts which are tax free
• Invest in non-quoted shares. AIM listed shares and shares in privately owned companies are free from IHT if held for two years