Inheritance Planning

The starting view for many is estate planning is all about when you die and passing on money. Clearly, yes this is a part of it - but it’s also about enjoying life now and ensuring you have enough to live on.

Protecting

Your Loved Ones

There are many ways to give away money, for example; one-off cash gifts, gifting a regular income, setting up trusts for long-term giving. With various rules on inheritance tax, potential tax implications and consequences – it’s so important to start planning early.

We will discuss with you such things as:

  • How much money you require to maintain your lifestyle
  • Assets you own, such as land/property & personal items
  • Who you wish to pass assets to on your death
  • How to pass on assets in an efficient and effective way
  • Potential tax bill implications

Trusts

In essence, a trust is a legal arrangement where you give cash, property or investments to someone else – so they can look after them for the benefit of a third person.

If you are a trustee, you must use the money or assets in the trust only for the beneficiary’s benefit. Exactly what you can and can’t do as a trustee should be set out in detail in the trust agreement.

If the trust is a ‘discretionary trust’, the trustees will have more freedom to make decisions.

For example, if the trust is set up to benefit a number of young children, you and any other trustees can use it for anything you agree is for the benefit of any one of the children, like paying for a school trip.

If you’re being asked to be a charity trustee, there are additional duties.

Before you agree to become a trustee you should seek professional advice from a financial adviser or a solicitor – to make sure you understand everything that’s involved.

Make An Inquiry

We offer advice on…​

  • Trusts
  • Wills
  • Allowances & Reliefs
  • Gifts
What is Inheritance Tax?

Inheritance Tax (IHT) is a tax charge on death (usually 40%) on any part of your estate that exceeds your personal allowance (also called the nil rate band). This is currently £325,000 plus up to £175,000 residence nil-rate band (where applicable) per person. Your estate is a combination of your

Inheritance Tax (IHT) is a tax charge (usually 40%) on any part of your estate that exceeds your personal allowance (also called the nil rate band). Your estate normally consists of everything you own worldwide. The charge drops to 36% if you give at least 10% of your estate away to charity when you die. 

Personal representatives (executors) of the estate are legally liable for reporting and paying the IHT due.

Estate planning involves planning how to pass on your assets to the next generation in the most effective way. A significant part of this will usually be minimising Inheritance Tax. This could be achieved by using allowances, making gifts, setting up life insurance or simply spending your money.

This is often the cheapest and simplest form of estate planning. You can make outright gifts that are tax-free, or gifts that are considered potentially exempt. You can also make gifts in trusts which will allow you to keep control over your money as you can choose who receives the gift and when.

Deciding how to make financial gifts and how much you can afford to give can be difficult, so you could consider speaking to a financial adviser who can point you in the right direction.

If you die with seven years of making a gift it will form part of your estate and could be subject to Inheritance Tax. During this seven-year period, the gift is known as a potentially exempt transfer. After seven years have passed, the gift leaves your estate – at this point it becomes an exempt transfer and is no longer liable to Inheritance Tax.

If you make gifts in excess if the nil rate band, the Inheritance Tax liability will reduce to 0% incrementally over the seven years. This is known as the seven year rule.

It is possible to leave gifts with certain conditions or requirements. This is usually achieved by setting up a trust. This means you could specify when the money is used and for what purpose – for example, on a grandchild’s 18th birthday or to pay for education fees.

If you made a potentially exempt gift that was bigger than the nil rate band, you could benefit from taper relief (also known as the seven year rule). This gradually reduces the amount of Inheritance Tax that is chargeable over the seven years after you made the gift.

The annual gifting allowance is £3,000 and you can split this between as many people as you like. If you don’t use it, you can carry it forward one year for a maximum allowance of £6,000
Gifts to your husband, wife or civil partner are tax-free if their permanent home is in the UK
You can make as many small gifts of £250 as you want, but one person can receive no more than £250
Regular gifts from excess income are tax-free, as long as they won’t affect your normal lifestyle
Gifts to charities, museums, universities, sports clubs and some political parties are tax-free

The rules can be complex so it is worth speaking to a financial planner if you have questions about making gifts.

From 6 April 2027, unused pension funds and death benefits will be included in a person’s estate for Inheritance Tax (IHT) purposes. Most unused defined contribution pension funds and death benefits will no longer sit outside the taxable estate.

Pensions left directly to a surviving spouse or civil partner will remain free from IHT. Spousal and charity exemptions apply.

Death-in-service benefits and dependant’s scheme pensions from defined benefit arrangements remain excluded

Helping You Plan A Successful Financial Future

Our core value is all about our clients, delivering good outcomes and fairness – working together to build a brighter future.

We’ll listen and take the time to truly understand your unique circumstances, goals    and aspirations. We can then move forward to create a personalised financial strategy designed to help you achieve your financial objectives and peace of mind at every stage of life.

What’s more – we are committed to using as little jargon as possible and putting things in plain English.

Our Approach