Estate and Succession Planning

In different areas and sections on this site we have mentioned ways in which clients can protect their assets, namely by Will or Will Trusts.

However by using other forms of Trusts to place assets outwith the estate, potential Inheritance Tax (IHT) savings may be available as well as protecting assets from being assessed for Long Term Care. This area of Estate Planning requires very careful attention to detail and for this reason a discussion with a Consultant is recommended. E-mail us stating your enquiry or phone our helpline FREE on 0800 0180 670 for guidance relating to Wills and Trusts.

You can also arrange an appointment with a Consultant to discuss your requirements, have the appropriate forms sent to you or end the contact at this point in time. Willpeople and any associated Consultant or Adviser will NOT make further contact with you unless we are requested to do so.

If any of the following subjects are related to your circumstances and a discussion is required the Consultant’s time in most instances is free.

Related Services (Trusts)

• Asset Preservation Trusts - Many people assume that their pension death benefits are paid free of Inheritance Tax but more often than not, it may be merely a deferral of Inheritance Tax. If the pension death benefits are paid directly to the deceased’s spouse then on the death of the spouse, the pension death benefit will form part of their estate on death. The Asset Preservation Trust will:
  1. protect death benefits from IHT on death of the surviving spouse
  2. ensure that the death benefits are not assessed as capital of the surviving spouse should he or she require long term care, and
  3. guarantee that the death benefits pass to your own children rather than say your spouse’s new husband or wife should he or she remarry.
• Business Trusts - Hold the life assurance arrangements by Partnerships or Company Directors to allow flexibility in ownership through death or retirement. These arrangements make sure that:
  1. the surviving shareholders/partners have the money to buy out the deceased from the business
  2. the deceased’s family gets a fair price for the deceased’s share in the business, and
  3. combined with appropriate wording in the deceased’s Will the generous IHT Business Property Relief (up to 100%) given for business assets can be carried forward to future generations even although business assets are no longer held.
• Individual Trusts - Holds death benefits under personal pension plans and allows clients to nominate Trustees of their choice rather than a company acting on their behalf.
• Guardianship Protection Trust – Operates on the basis of a Life assurance plan (joint life second death) creating funds for Guardians to look after children who are orphaned.
• Gift Plan Trust – Allows clients to invest via an Investment Bond ensuring that IHT is mitigated if they survive seven years as the original value of the gift will be outside their Estate along with any growth in the value of the Bond.
• Absolute Trusts – Allows grandparents to gift to a grandchild e.g. school or university fees planning and allows the recipient to make use of their personal tax allowance and Capital Gains Tax exemptions.
• Inheritance Creation Trust – Operates on the basis of a Life assurance plan (either single life or joint life second death) creating funds for anticipated IHT liability or to create an additional legacy upon the Estate.
  

The above are a few examples of Trusts that Willpeople can set up on your behalf to protect assets or ensure that your specific wishes are carried out.

Click on Avoiding Inheritance Tax (IHT) to view details of Discretionary Will trusts.

Inheritance Tax – Case Study

David & Sally are aged 55 and 49 respectively and have three children.

David has been the managing director of ABC Limited, a manufacturing company, for many years and he has a 50% stake in the business. It is estimated that David’s shares in the business are currently worth approximately £500,000.

As well as David’s business, they have the following assets:

Sally is also due to receive £250,000 from the estate of her father who died six months ago.

They currently have mirror wills leaving their respective estates to each other or should they both die their estates will pass to their three children equally.

Assuming David dies first and the nil rate band remains at £285,000 the Inheritance Tax Liability on Sally’s death will be:

The Estate will be divided on Sally’s death as follows:

The Inheritance Tax payable on the above Estate at 40% would be £816,000 - Each child would receive £508,000

The inheritance tax liability of £822,000 could have been reduced to at least £210,000 (a saving of £616,000) and still allowed David and Sally full access to their capital during their lives had they taken proper advice and had correctly prepared wills.

Can you afford to do nothing?