AIM Inheritance Portfolio Case Study
Lessening the impact of Inheritance Tax on your estate.
Mr and Mrs X are both in their early 60’s with two grown-up children. They have never thought of themselves as particularly wealthy, but with the rise in property prices over the last few years they now realise that the house combined with their other assets would amount to an estate of somewhere in the region of £1.5 million.
Their concern is that if they should die, there would currently be a large inheritance tax (IHT) liability on their combined estate. Under the Inheritance Tax rules, revised in October 2007, if the value of the estate of a married couple exceeds the combined threshold of £600,000 (rising to £700,000 by April 2010), then the excess may ordinarily be subject to Inheritance Tax at 40%.
They consider placing £400,000 in the AIM IHT portfolio. The following chart shows the position on death, assuming they both live for a minimum of 2 years subsequent to investing.
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Without AIM IHT Portfolio | With AIM IHT Portfolio |
| Total Estate | 1,500,000 | 1,500,000 |
| Less 2 x Nil Rate Band(2007/8 values) | (600,000) | (600,000) |
| Less value of AIM portfolio | - | (400,000) |
| Taxable Estate | 900,000 | 500,000 |
| IHT @ 40% | 360,000 | 200,000 |
| Value of estate after IHT | 1,140,000 | 1,300,000 |
| IHT Saving | - | 160,000 |
The funds held in the AIM IHT portfolio remain accessible to Mr and Mrs X at any time and they can consider the use of other options, such as trusts, as and when their circumstances dictate. In the meantime, in the event of death, there is a substantial saving in IHT for their beneficiaries.