What if you already have plans in place? Remember – time, legislation and family dynamics can change. A thoughtful review can help ensure everything still works as intended.
Why review your IHT plans now?
Many people assume that once a Will is written, the job is done. In reality, estate planning is an ongoing process.
It’s worth asking:
- Do my current plans still reflect my wishes?
- Have asset values changed significantly since I last reviewed them?
- Are my plans still tax-efficient under today’s rules?
Small adjustments can often make a meaningful difference.
A reminder of how IHT works
IHT is charged on the value of someone’s estate when they die. An estate includes:
- Property
- Savings and investments
- Personal possessions
- Other assets held in their name.
Currently, estates valued above £325,000 may be subject to IHT on the amount above that threshold, usually at 40%. This rate can reduce to 36% if at least 10% of the estate is left to charity.
What role does property play?
There is an additional allowance, the main residence nil-rate band, which applies when a home is passed to direct descendants, such as children, stepchildren or grandchildren. This allowance currently stands at £175,000 per person.
When combined with the standard threshold, this means:
- Individuals can potentially pass on £500,000 tax-free
- Married couples or civil partners may pass on up to £1m.
However, this additional allowance is tapered for estates worth over £2m and removed entirely above £2.35m, which can catch families by surprise.
How can I make lifetime gifting work for me?
Later life can be an ideal time to make deliberate, well-planned gifts, particularly where income comfortably exceeds expenditure.
Effective approaches may include:
- Using annual exemptions consistently
- Making larger gifts, where appropriate, with a clear understanding of the seven-year rule
- Making regular gifts from surplus income, which can be immediately outside the estate if structured correctly.
Questions to reflect on:
- Am I holding on to assets I don’t really need?
- Could gifting now reduce stress and tax later?
- Would my family benefit more from support today rather than in the future?
Trusts and life insurance
Trusts can help move assets outside the estate while retaining a degree of control, particularly where family circumstances are complex. Life insurance, when written in trust, can provide liquidity to meet an IHT bill without forcing beneficiaries to sell property or investments.
These tools work best when:
- Reviewed regularly
- Aligned with your broader estate and income planning
- Explained clearly to those involved.
Pensions, beneficiaries and legacy
With pensions forming part of the IHT calculation from 2027, reviewing beneficiary nominations and withdrawal strategies is essential.
Ask yourself:
- Do my pension nominations reflect my current wishes?
- Are there opportunities to align pension planning with my legacy goals?
- Have I considered how pension decisions affect both tax and family outcomes?
The value of family conversations
Legacy planning isn’t just about tax. It’s about understanding and reassurance.
Open discussions can:
- Reduce uncertainty
- Avoid future conflict
- Give family members confidence in your plans.
Your Finli planner can support these conversations, offering an experienced, impartial perspective and helping ensure plans remain clear, current and compassionate.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. The Financial Conduct Authority (FCA) does not regulate Will writing, tax and trust advice and certain forms of estate planning.