Estate and Inheritance Tax Planning

Estate and Inheritance Tax Planning

For complete peace of mind it’s important to balance your income requirements during your lifetime whilst ensuring that those who will inherit do so in accordance with your wishes, avoiding unnecessary Inheritance Tax. Here we explain the different aspects to consider when reviewing your estate and inheritance tax planning.

The Financial Conduct Authority does not regulate tax advice or will writing.

Wolverhampton: Impartial Investment Advice

John, a retired Accountant from the Midlands, and Jean had been regularly visited by an Equitable Life salesman, and had invested all their money (>£1 million) with this insurance company. When Equitable Life’s guaranteed annuity rate liabilities caused them to effectively collapse, John and Jean were left high and dry and urgently needed some impartial investment advice.

Their accountant asked if we could help, and we rearranged their finances and analysed each option in respect of their Equitable exposure, taking taxation, disinvestment penalties and the alternatives into account, before suggesting an action plan that was then executed in stages over the next few years.

Their portfolio is now in rude health, and we regularly review the portfolio performance, and any income or capital requirements.

NB. Whilst the Client names have been changed for Client privacy purposes, these case studies are actual ASPL Client case studies.

Nil Rate Bands

Everyone’s estate (the value of everything you own) is exempt from Inheritance Tax up to a certain threshold (£325,000 in 2014/15).

This is also known as the “nil rate band”.

Married couples and registered civil partners are also allowed to pass assets from one spouse or partner to the other during their lifetime, or when they die, without having to pay Inheritance Tax. This is known as the (UK) Spouse or Civil Partner Exemption.

Since October 2007, you can transfer any unused Inheritance Tax threshold from a late spouse or civil partner to the second spouse or civil partner when they die. This can increase the Inheritance Tax threshold of the second partner from £325,000 to as much as £650,000 (2014/15), depending upon the circumstances and the nil rate band in force at the time of the first death.

Typically if someone leaves everything they own to their surviving spouse or civil partner in this way, it is not only exempt from IHT but it also means that they haven’t used any of their own IHT nil rate band and it is therefore available to increase the nil rate band of the second spouse or civil partner when they die (even if the second spouse has remarried).

This means that their estate can be worth up to £650,000 in 2014/15 before they owe any Inheritance Tax.


There are some important Inheritance Tax exemptions that allow you to make gifts to others and not to have to pay tax upon them when you die. These include the “7 Year Rule” (Potentially Exempt Transfers or PETs), Annual Exemption, Exempt Gifts, Gifts into Trust etc. Please contact us for a more in-depth discussion about your own circumstances.

You can use Trusts to pass assets onto others, for example to those who aren’t immediately able to look after their own affairs, such as your children.

Gifts into a Trust may still be subject to Inheritance Tax if your estate, including the amount being transferred, is over the Inheritance Tax nil rate band threshold (£325,000 in 2014/15).

Trust planning requires professional advice and so please contact us for further details.

The Financial Conduct Authority does not regulate Trusts.

Making a Will

Making a Will and being sure people know where to find it is one of the first steps to making sure that your estate is shared out exactly as you want it to be when you die.

If you don’t leave a Will, your estate will be shared out amongst your next of kin according to a strict order of priority called the “Rules of Intestacy”. (This means that people you want to benefit from your estate  might get nothing).

You may also have specific bequests that you wish to make, or events that you only wish to happen in certain circumstances, or monies that you only wish to be passed on at a certain age etc., etc.

If you do not have your own solicitor we can refer you to one of our professional colleagues.

We often recommend that finalising your Will should also include discussion of Lasting Powers of Attorney.

The Financial Conduct Authority does not regulate will writing.

Lasting Powers of Attorney

A Lasting Power of Attorney (LPA) is a legal document that allows you to select the people that you would trust to make decisions on your behalf on matters such as your financial affairs and your health and welfare at a time in the future when you no longer wish to make these decisions or when you may lack the mental ability to do so.

Clearly, the time to consider making an LPA is when you are in good health rather than poor health.

LPAs replaced the “Enduring Powers of Attorney" (EPA) although EPAs made before October 2007 remain effective and can be registered in the same way that the new LPAs can.

Our Clients who have made old style EPAs often decide to retain them and make a new style LPA for personal welfare issues.

Please contact us for further details, or if you don’t have your own solicitor we will be happy to refer you to one.

Death and Probate

Bereavement is often a difficult and emotional time, and dealing with the legal side of death, the taxman and possibly attending Court can seem complex.

If you have to handle someone’s estate upon death and you do not have your own solicitor, please contact us and we will refer you to one of our professional colleagues.

Making Gifts to your Family

As your children grow older and have their own families, at some point you may want to make a “Gift” of money to help them out or simply to advance part of their eventual inheritance to them early.

You may want to assist with the purchase of a home or help them out of some financial difficulty.

With some Gifts you don’t need to worry yourself about Inheritance Tax issues, and some you do.

For specific advice, kindly get in touch with us.


If you don’t already have your own solicitor, we would be happy to refer you to one of our professional colleagues to help deal with any legal matters concerning estate or Inheritance Tax.


Coventry: Inheritance Tax Planning

Jean was in her mid-60s, based in the Midlands and came to ASPL for advice on inheritance tax planning. She had just inherited £400,000 from her mother, and in addition to this, had just under £1 million of capital in her own name. Her main concern was inheritance tax.

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Adrian Smith

Adrian is a Chartered Financial Planner and a CERTIFIED FINANCIAL PLANNERTM professional. He established Adrian Smith & Partners Ltd. in June 1999. His qualifications include Chartered Financial Planner, Certified Financial Planner (CFP), Financial Planning Certificate (FPC), Advanced Financial Planning Certificate (AFPC), Securities Institute Foundation Certificate, Dip PFS.

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Ivan Hutchings

Ivan is a CERTIFIED FINANCIAL PLANNERTM professional and joined ASPL in 2003.  His qualifications include: Certified Financial Planner (CFP), Advanced Financial Planning Certificate (AFPC), Financial Planning Certificate (FPC), G60 Pensions.

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FCA Statement


Adrian Smith

Chartered Financial Planner
Chartered Wealth Manager

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