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Are you blowing your kid’s inheritance?

Having worked hard all your life, you should be able to spend your money how you want. Right? Well your children might have something to say about that, with one in 10 adults thinking their parents are wasting their inheritance.

Luckily whether you are spending it or saving it, there are ways to cut your Inheritance Tax bill so can you leave more money behind.

For many, being retired is a chance to enjoy new-found free time, with travel, home improvement and activities often high on the shopping list.

However, research from finance company SunLife has found a tenth of us aren’t happy with this spending.

The survey also found one in six adult children are relying on inheritance from their parents to help them with their own finances.

How you spend your money is up to you, and it’s a bad idea for family members not to plan for their own future.

Yet anything you do leave behind can be a welcome boost.

To make sure your loved ones get as much as they can, follow these three tips to reduce how much Inheritance Tax you’ll pay on your estate.

Gift some to family and friends

If you’re married or in a civil partnership, anything you choose to leave to your partner is already free from Inheritance Tax.

For other family members or friends, you are able to give up to £3,000 in total each year and not pay Inheritance Tax on the money.

You can also give children and grandchildren cash when they get married.

You can give more money and belongings as well, and as long as you live for another seven years,  it won’t be counted as part of your estate when you die.

Leave money to charity

You don’t pay Inheritance Tax on any money left to charity. If you leave more than 10% of your estate, your overall tax bill will be cut from 40% to 36%.

Buy life insurance

Sometimes family members are forced to sell property or assets to cover the cost of Inheritance Tax.

In most cases, you can make sure this doesn’t happen by taking out a “whole of life” insurance policy.

Doing this essentially means when you die, the insurance pay-out from the policy goes towards covering the tax bill. However, any gifts given in the last seven years would still be due Inheritance Tax.

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  • Geoff Sadler / 22 July 2016

    I'd like to figure out if the Baby Boomers are really the first generation to be in worse financial shape than generations prior to the Baby Boomer generation... hence affecting inheritance assets left by Boomers to their heirs.

  • Kathy Jensen / 25 April 2016

    I have some children that really needed the money. But I'm extremely self centered. I cheated on my ex husband and the one before that. Now I'm remarried to a man that needs all my and my ex husband resources. Basically my current husband can't take care of himself. We have spent the children's inheritance money for nothing other then our own pleasures. Which before, me and my former spouse could have done the same thing without any gross spending. I can't help what I am, nor can I ask for forgiveness. What can I do?