cushion the blow for those you leave behind

Estate Planning


With careful planning, it is possible to take preventative action to mitigate an Inheritance Tax bill

When you’ve worked hard and invested carefully to build your wealth, you want to look after it. That’s why it’s important to plan for your wealth preservation and the eventual transfer of that wealth.

Individuals with assets of any size should seek professional financial advice to consider what action may need to be taken before it’s too late. The reality is, most of us should prepare for the eventual transfer of our assets, regardless of any tax or legal consequences. It is natural that many of us want to leave our wealth to those who matter the most.

Having a well-managed estate can save time and legal costs in the long term, help avoid a large Inheritance Tax bill, and cushion the blow for those you leave behind. Everyone’s circumstances are different – planning can look at tax-efficiency and maintaining access to income and capital. It can also include protection from irresponsible beneficiaries, or to provide for vulnerable or minor (those under 18) beneficiaries.


Make a Will

A vital element of effective estate preservation is to make a Will.

Making a Will ensures an individual’s assets are distributed in accordance with their wishes. This is particularly important if the person has a spouse or registered civil partner.

Even though there is no Inheritance Tax payable between both parties, there could be tax payable if one person dies intestate without a Will. Without a Will in place, an estate falls under the laws of intestacy – and this means the estate may not be divided up in the way the deceased person wanted it to be.


Assets can be put in an appropriate Trust, thereby no longer forming part of the estate. There are many types of Trust available and many are simple to set up.

They usually involve parents (settlors) investing a sum of money into a Trust. The Trust has to be set up with trustees – a suggested minimum of two – whose role is to ensure that on the death of the settlors, the investment is paid out according to the settlors’ wishes. In most cases, this will be to children or grandchildren.

The most widely used Trust is a Discretionary Trust, which can be set up in a way that the settlors (parents) still have access to income or parts of the capital. It can seem daunting to put money away in a Trust, but it can be unwound in the event of a family crisis and monies returned to the settlors via the beneficiaries.


Make allowable gifts

A person can give cash or gifts worth up to £3,000 in total each tax year, and these will be exempt from Inheritance Tax when they die.

They can carry forward any unused part of the £3,000 exemption to the following year, but they must use it, or it will be lost.

Parents can give cash or gifts worth up to £5,000 when a child gets married, grandparents up to £2,500, and anyone else up to £1,000. Small gifts of up to £250 a year can also be made to as many people as an individual likes.

Parents are also increasingly providing children with funds to help them buy their own homes. This can be done through a gift, and provided the parents survive for seven years after making it, the money automatically moves outside of their estate for Inheritance Tax calculations.

Life Assurance

Provide for the tax

If a person is not in a position to take avoiding action, an alternative approach is to make provision for paying Inheritance Tax when it is due.

The tax has to be paid within six months of death (interest is added after this time). Because probate must be granted before any money can be released from an estate, the executor may have to borrow money or use their own funds to pay the Inheritance Tax bill. This is where life assurance policies written in an appropriate Trust come into their own.

A life assurance policy is taken out on both a husband’s and wife’s life with the proceeds payable only on second death. The amount of cover should be equal to the expected Inheritance Tax liability. By putting the policy in an appropriate Trust, it means it does not form part of the estate. The proceeds can then be used to pay any Inheritance Tax bill straight away without the need to wait for the Grant of Probate or the executors to borrow funds.

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