Forward-planning to protect your inheritance

Over the last few weeks, at Grosvenor Wealth Management, we have been running a series of webinars in partnership with Sherrards Solicitors to offer insights into the plans you need to make to protect your inheritance.

It can be a difficult subject to discuss, as nobody wants to think about dying. However, most people want their loved ones to benefit from their assets after they die and our webinars gave some practical legal and financial planning guidance on the best ways to achieve this. Here is a brief summary of the areas we covered:

Protect your inheritance

1. Writing a Will

You should always write a detailed Will that sets out exactly who you want to receive any benefits and what they should get. It is easy to make mistakes or miss a vital element out of your Will if you try to do it yourself, so we always advise you to get a solicitor to draw one up for you.

2. Pensions

Different types of pension scheme have different advantages and disadvantages and they are not usually considered to be part of your estate when you die, which means they are exempt from Inheritance Tax. There are also tax-efficient options that allow you to pass your pension on down through the generations. As with all financial planning, there are complex rules that govern the inheritance of pension benefits and you should take professional advice if you want to pass these on. It is also important to keep your Will up-to-date regarding pensions and, where appropriate, to complete an Expression of Wish or Nomination of Beneficiaries form.

3. Insurance protection

Combining insurance protection with a Trust can help your beneficiaries with paying any Inheritance Tax when you die. Whether this is appropriate for you will depend on the nature of your estate. You could also write any life insurance policies you have into a Trust, as this can help ensure your loved ones receive their inheritance promptly, without incurring Inheritance Tax. To find out more about how insurance policies can help, please contact us.

4. Business assets

Whether you are a business owner or not, there are various options open to you to mitigate any Inheritance Tax liability, including Business or Agricultural Property Relief, passing your business assets on through a Trust, or Enterprise Investment Schemes. However, this is a complex and sometimes risky area and we strongly recommend that you ask us for advice based on your personal circumstances.

5. Property

If you are a property owner, there are various tax benefits open to you, although the nature of these benefits often depend on your ownership status and the value of your property. For example, in certain circumstances, inherited properties are eligible for Residential Nil Rate Band, meaning they may be exempt from Inheritance Tax. However, the rules that rules that govern this are complex, so if you want to pass your property on through your Will, it is important to ask your solicitor for advice.

6. Gifting

While you are alive, you can make a tax-exempt gift of up to £3,000 each year. For gifts above this amount to be exempt from tax, you must usually survive for seven years after making the gift. However, when it comes to gifts you need to be careful as both Inheritance Tax and Capital Gains Tax can come into play in certain situations, so you should always take professional advice

7. Trusts

Putting your assets into a Trust can be a tax-efficient way of passing assets on. In most cases, if you survive for seven years after the Trust is set up, any assets in the Trust become exempt from Inheritance Tax. However, you will find a bewildering array of Trusts, from Discretionary Trusts, Bare Trusts of property, Discounted Gift Trusts, and Gift and Loan Trusts, to Life Interest Trusts and 18-25 Trusts in Wills. Each has its own merits and it is vital that you select the right ones to meet your specific needs. For advice on which Trusts will be best for you, please contact us.

8. Arranging Lasting Powers of Attorney (LPAs)

Arranging Lasting Powers of Attorney is an effective way of ensuring that decisions about your life, financial arrangements and assets can be made on your behalf if you lose the ability to make decisions for yourself. There are three types of LPA, which involve appointing people as Attorneys to act in your best interests. You need to take care to choose people who you trust to control your life, as Attorneys are not legally obliged to report to anyone. Our advice is to always ask your solicitor for guidance on what type of LPA you should arrange and who to appoint as Attorneys.

Talk to us

We can advise you on the best way to ensure your estate is passed on in the most tax-efficient way, taking your personal circumstances and wishes into account. We will work with your solicitor – or recommend a reliable solicitor if you don’t have one – to guide you through the complexities and ensure your inheritance goes to your loved ones in the most tax-efficient way.

View the recorded webinars
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