Inheritance Tax (IHT) and Wills - Top Tips

The death of a loved one is always going to be a tough time, but without a Will and where they leave behind significant assets, distributing the estate and paying the necessary tax can make things even harder. Here are a few tips to help make things run a little more smoothly:

  • Make a will
    And keep it up to date to reflect any changes in your circumstances like marriage, divorce, births and deaths. Think about this in terms of both your named beneficiaries and any executors you’ve chosen.

  • Get married!
    If you’re co-habiting it might be worth considering a marriage or civil partnership because it confers certain benefits on death - enabling property and pensions to be passed to the surviving partner as well as certain IHT allowances.

  • Consider Whole of Life Plan

    A Whole of Life Plan can provide a lump sum which could help to pay any IHT liability while probate is arranged and property is sold.

  • Make regular gifts
    If you can afford to make gifts from regular income you could consider contributing up to £2,800 per year net into a pension for any children/grandchildren. This may reduce the value of your estate for IHT as well as potentially building up a very significant pension pot providing financial security for the child/grandchild.

  • Use Direct Payment Scheme
    If the deceased has sufficient funds in a bank or building society account, you may be able to access these to pay the deceased’s inheritance tax bill. For more information see HMRC website (https://www.gov.uk/paying-inheritance-tax/deceaseds-bank-account).

If you’re concerned about IHT liabilities for yourself or a family member you could speak to you adviser. Or if you’d like more information you might like to review our factsheets on Inheritance Tax and Wills, or visit the Money Advice Service website.

The Financial Conduct Authority does not regulate tax advice.

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