Inheritance Tax Planning

A solicitor introduced us to a couple who wished to discuss inheritance tax planning, as there existing adviser did not look at this area holistically. The solicitor had updated the clients’ wills and put in place LPA’s to ensure that there wishes were adhered to if they were not deemed capable of managing their affairs. The clients were keen to start considering inheritance tax planning but at this stage of life felt that they were too young to gift away capital themselves.

They were unsure about using trusts because they felt the trust took away control and the access to their capital.  We conducted a full strategic financial review and the clients as a result of illustrating and extrapolating the wealth using a cash flow were in a better financial position than they had first thought.

They could see that they would have sufficient income in retirement to meet their outgoings and objectives. Even so, they still did not want to give away the control and access to any of their capital. In terms of inheritance tax planning, the clients were relatively young. Thankfully, in terms of health, they were both enjoying excellent health.

We recommended that the clients implement a joint life whole of life insurance policy. The payment would be made on the second death and go straight into a trust. The monthly premium was affordable both now and in the future, based on income and outgoing projections.

This allowed the clients to meet their objectives and put in place a policy that was guaranteed to pay a lump sum to a trust. They were happy with this type of arrangement as it did not take control of their capital. The payment would be made on the second death and would not be subject to the delays beneficiaries may face during probate.

The clients took our advice as they felt the policy ‘was not another insurance policy’ and viewed it as a future investment for their children. As the clients become older they will be able to make further use of trusts, as their needs change and become clearer. This will be arranged with their solicitor and ourselves, working together for the clients.

The above case study is for information and illustration only. It is not intended to be individual advice and it should not be taken as such. If you have any questions relating to your own circumstances, please contact us.