There are so many different facets to Estate Planning that clients just have not thought about.

Why would your clients want to invest and save all their lives and then have 40% of it to go into inheritance tax and the rest of it divided amongst people they didn’t intend to.

Let me tell you of a horror story: Ms. Money-bags had built up a fabulous business and it generated a substantial amount of money. She allowed the profits build up in the company bank account because she didn’t want to pay the higher income tax rate that extracting the profits would cause.

Sadly, Ms. Money-bags became ill and passed away – without doing any IHT planning. When the executors submitted the IHT account, HMRC asked them to pay inheritance tax on the £1 million bank balance that Ms. Money-bags had let build up in the company.

Her children were not impressed at all. They thought that the entire value of the company should be free from IHT, under the Business Property Relief (BPR) rules.

Unfortunately, the IHT rules say that if a company holds assets, including cash, that are not used in the company’s trade, that proportion of the company’s shares are subject to IHT.

In some cases, it is possible to claim business property relief where it can be shown that the cash is required for the trade or is being retained for future investment in the business, but it is not always possible, so it is best to obtain professional advice.

And the moral of this story is…

  • If there is a lesson to be learned from the above tale, it is this:
  • It is a good investment to obtain sound Estate Planning advice.
  • I have been a qualified solicitor since October 2003, and solely work in Estate Planning law.

Please take a look at my website [here] and contact me to see how I can best help you protect your assets and give you and your family peace of mind.