Inheritance Planning

  • Have you considered how to pass on your estate from every angle?
  • Get advice relevant to your circumstances
  • Put a plan together and know it will work
  • Have you missed out a vital part of your planning

What is Inheritance Planning?

Most of us agree that succession planning for our wealth is important. The question is when to do it? It’s no wonder we’re nervous about handing over control and ownership of our wealth whist we are alive, giving it away now can be part of a plan but the dilemma is you might then need it later on because let’s face it, we’re all living longer. 1 in 6 of us alive today will reach a 100, so how you manage the transition of your wealth is crucially important. It is possible to give it away now and still keep control of it, so why not ask us how?

Your wealth has literally taken you a lifetime to build, so it would be devastating to see some (or all) of it disappear and deprive your family of their rightful inheritance. You can do something about it.

We are extremely fortunate in this country to have access to Trusts.

Placing your assets in Trust is a cost effective option and it will probably solve a multitude of other issues at the same time too, such as:

1 – Probate costs are always far higher than people expect, typically 3% of the value of your estate +Vat +Disbursements, let alone the inconvenience and substantial delay in administering it

2 – Inheritance Tax applies if the value of your assets exceeds the available Nil Rate Band thresholds at the date of death

3 – Sideways disinheritance is where your partner remarries after your death, doesn’t make a new Will and the whole estate passes to him/her, disinheriting the children from the first marriage, it happens more often than you think.

4 – Unreliable children/beneficiaries whether it be drink, drugs, gambling or even an unfortunate divorce, could see your hard earned inheritance to them wasted. It is problem you can solve with our help.

5 – Incapacity and ‘means testing’ for care home fees can be devastating to your estate and your children’s inheritance.

6 – Anyone (with just cause) can and probably will contest your Will if you fail to make ‘reasonable financial provision’ for them. By using a Discretionary Trust you can avoid this and succeed with your plans.

Top Inheritance Tax Tips

  1. The Annual Exemption Amount – you can give away £3,000 each tax year, so a couple can give away twice this amount. If you don’t use this allowance one year, you can use it in the next year.
  2. Gift Assets to your Children – these are known as ‘potentially exempt transfers’ (PET’s) and provided you survive 7 years then the job is done. Who should make the gift? Be wary about gifting away something you may need in the future.
  3. Gift out of excess income – if you have an IHT estate and your income is higher than your expenditure each year, the IHT problem will only get worse as time goes by. You can gift it away on a regular basis (provided you then don’t live off your capital instead) and what you gift is not deemed to be a 7-year gift. It is immediately exempt from IHT. The rules can be tricky to implement but this is a very significant tool if used correctly.
  4. Deed of Variation (DoV) – say a relative dies and leaves you an inheritance that creates you an IHT liability. Use the DoV procedure to vary that Will after death and set up a Trust to receive the inheritance for the benefit of you, and your family. There are time limits, but this works very well if set up correctly.
  5. Business Property Relief (BPR) Scheme – if you hold investment assets in a BPR scheme for only 2 years they will be 100% exempt from IHT. You need to retain these assets until you die but you can get an income from the investment and, since you have not given these assets away, you can cash them in at any time if you need to. Some BPR investment providers will insure your IHT liability on what you have invested for the two-year period until you then get your exemption in place, meaning your investment is ‘IHT free’ pretty much from the start.
  6. Settlor Excluded Trust – if you want to gift an asset to your children to avoid your IHT after 7 years, but the asset has gone up in value (like a house) and would trigger a CGT liability if you sell it, you could instead set up a Settlor Excluded Trust and transfer the asset to that trust. As you are the Settlor and a trustee you therefore retain control of the asset, but as you will have no benefit from it, given 7 years it will be out of your estate for IHT, and you may well get holdover relief for CGT as well.
  7. Discounted Gift Trust – can seem attractive and you can get an immediate IHT exemption for part of your initial investment. The trouble is the portion that is exempt is based on your age and health so it may not be as great as you had wished for.
  8. Family Protection Trusts (FPT’s) – avoid the problem in the first place. If inheriting from your parents is going to give you an IHT problem, get them to set up FPT’s because with their assets ‘in trust’ you will have the option of borrowing your inheritance from the trust in exchange for a valid loan note so that you get the full benefit of the inheritance without incurring an IHT liability.

What Our Clients say

Patient, informative and able to clarify all of our queries
Will Planning Solutions Will Writing | Family Protection Trust | Probate | Living Wills | Lasting Power of Attorney | Guardianship | Prepaid Funeral Plans

John Barrowcliffe 

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See how Rob Abell can help you and your family plan for the future.

Will Planning Solutions Will Writing | Family Protection Trust | Probate | Living Wills | Lasting Power of Attorney | Guardianship | Prepaid Funeral Plans
Will Planning Solutions Will Writing | Family Protection Trust | Probate | Living Wills | Lasting Power of Attorney | Guardianship | Prepaid Funeral Plans

Rob Abell

Wills & Estate Planning


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