ISA’s Post Death

ISA’s Post Death – What happens to your ISA when you die?

If you have saved money into ISA’s over the years, you may have accumulated a large sum. Naturally you are happy with the very tax efficient treatment of ISA’s and want to hang onto your ISAs for as long, as you can.

What you may not realise is that your ISA, although tax efficient in many respects, will be subject to Inheritance tax of 40% when you die. (If the total value of your estate is I excess of £325,000).

Since 2014, after your death, your ISA may be passed to your wife (retaining the tax benefits). In addition, your wife would be allowed to contribute the normal ISA allowance for that year.

However, you may not have saved on Inheritance Tax, merely deferred it, as on second death, HMRC will demand its pound of flesh and (if the estate is worth more than £325,000 or that amount plus any transferable nil rate band) charge your estate 40%.

There are advisers who will encourage you to switch your investments in an ISA to AIM shares that qualify under Business Property Relief rules.

If the survivor of you is elderly, do you really want the stress of investing in small company shares. For most people the answer is NO.

This is a relatively minor matter to consider, unless you have quite a large ISA portfolios. With Estate Planning we believe all matters are important and should be taken into account when carrying out advance planning for clients.

Ray Best is a resilient Financial Planner with a unique approach to investment planning, his work ethic has propelled him from humble beginnings to be voted as a top UK Financial Planner by Vouched For (as published in the Sunday Times). These days he works with families with large investment portfolios or big inheritance tax liabilities, the first step, is to book a Discovery Meeting HERE.

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