Estate planning & Inheritance Tax

The amount someone can pass on free from inheritance tax (the nil-rate band) has been frozen at £325,000 since 2009.

And thanks to rising house prices and stock markets, more people than ever are set to face an inheritance tax bill. The amount of inheritance tax collected is predicted to reach £6.9 billion by 2023–24. That’s an increase of £1.5 billion in just five years according to the HM Treasury Budget, October 2018.

An Expanding Brief

Estate planning never happens in a vacuum. It’s not uncommon for people to make significant life changes during the period when estate planning takes place. Some will sell their home and ‘downsize’, freeing up capital that was previously illiquid. Others who are business owners may sell their business, or a part of it, and are very likely to need advice about the best way to do it and what to do with the money.

Then there are those whose portfolios could benefit from some reallocation, for example those holding more cash than they could possibly need for their own requirements.

In all these cases, we often find we end up advising on assets that just weren’t part of our brief before.

Now you may find that it may be a bit early to start thinking about your own estate planning. But that doesn’t mean the topic holds no relevance. That’s because many people are now very likely to be the beneficiaries of parents’ or grandparents’ estate planning. This can be the case, for example, when grandparents help their grown-up children to do something for grandchildren.

An Ageing Population

The UK has an ageing population. A feature of increased life expectancy is that it’s harder than ever to know how long people will need their money. Rising care costs are another factor that make people increasingly reluctant to give up control of their assets.

Often this can lead to many folk being reluctant to do estate planning in general, as it feels complicated and fraught with uncertainty. There is also the obvious but important point that many people are less than enthused by the prospect of giving away large sums of their own money, an act many associate with estate planning.

Good News

The good news is that whilst giving up ownership of assets might be true for some of the estate planning solutions, such as gifting and settling assets into a discretionary trust, not all planning solutions mean permanently putting capital out of reach. We have solutions that can place capital outside of peoples’ estates very quickly whilst still giving them access should they need to for issues such as long-term care etc.

If you are looking for inheritance tax planning advice, or advice on how best to plan your estate, we can help. Either call us on 0118 916 5480, start a web chat or fill out our contact form at the top of the page and we’ll be in touch right away.