UnaVida | ISA’s Post Death

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.

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A pension is a long-term investment that typically cannot be accessed until age 55 (57 from April 2028). The level of pension benefits offered could change depending on the value of your investments (and any income they may generate).

The interest rates in effect at the time you begin receiving benefits may also have an impact on your pension income. The tax consequences of pension withdrawals will depend on your unique situation. In later Finance Acts, tax rates, tax bases, and tax relief may change.

The opinions expressed by Ray Best are meant to inform and educate. Before making any investment decisions always take advice that is pertinent to your investment personality and financial situation.

You are aware that past performance will not necessarily be repeated in the future, but you should be aware that persistent poor performance invariably will.

The value of an investment and the income from it could go down as well as up.

The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

UnaVida Wealth Management Ltd. is directly authorised and regulated by the Financial Conduct Authority (440577).

The guidance in this website is primarily aimed at a UK audience and is subject to regulation by the Financial Conduct Authority (FCA).

The Financial Conduct Authority does not regulate tax planning, estate planning, or wills and any form of legal documentation.