How to navigate changing inheritance tax rules with good estate planning: Ian Dyall
But it is true that more families will be drawn into the web of inheritance tax in the coming years, and some of those will need to start planning now if they want to mitigate the effects.
The IHT rule changes could really undermine many families’ current plans for transfer of wealth, leaving them exposed to quite significant tax bills.
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Hide AdSo as we head into 2025, there’s an important opportunity for many households to look at their estate planning, not just through a tax lens but also thinking about what they want to do with their assets and what will end up being best for the family’s future.


Make or check your Will
If you don’t have a Will then making one is often a huge step in establishing financial security and peace of mind for your family – especially if you can get your solicitor to work closely with a good financial planner.
Having Wills in place is especially crucial for unmarried couples in long-term relationships - as the intestacy rules could lead to an unwelcome distribution of assets at death - and for blended families where uncertainty and misunderstanding can arise. Where the family home is not jointly owned, that could also create issues at death and couples can consider how their property is owned at the same time as looking at Wills.
Even where Wills are in place, and especially if they were made some time ago, make sure that they still do what you want them to, and that new tax rules do not require a rethink.
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Hide AdTo take one example, after the changes to business relief and agricultural property relief in the Budget, for many families with businesses or farms the traditional mirror Wills for married couples – where the couple leaves everything to one another and then to their children - might no longer be the best option to maximise the use of available IHT reliefs.
The £1m business relief 100 per cent band is not transferrable to the surviving spouse, so leaving everything to your spouse could waste the allowance of the first spouse to die.
Leaving BR assets up to the £1m band either directly to children, or to a trust that the surviving spouse can benefit from on first death may result in a significant inheritance tax reduction.
Gift or spend
More estates will find they are likely to incur growing IHT liabilities, whether that is the result of the inclusion of pensions as a taxable asset, or the dilution of reliefs, or just because growth in asset values is dragging them over the nil-rate bands. Their residence nil-rate band could also start to disappear if their estate starts to be valued at more than £2million.
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Hide AdOne perennial remedy for this is to spend more on yourself and your family or to give away more wealth during lifetime to shrink the estate so that less of it is taxable at death. Many older savers and investors find it difficult to switch from accumulating wealth to spending it or giving it away, so sometimes this can require a bit of a change of outlook.
Then the big question is usually, are you happy to lose control of the funds that you’re giving away? Both in the sense of whether it leaves you with sufficient funds to live out the rest of your life the way you want to, which is where a financial planner’s forecasts can come in very useful. And also of whether you’re happy that your relatives will use your generous gifts in a way that you’d prefer.
Trusts put in place with expert advice can be invaluable because this is a way to retain some control over assets while still gifting them and setting the “seven-year clock” ticking. Families must also pay heed to the gifting rules which are not straightforward.
It’s important not to make drastic decisions off the back of the Budget announcements. Now is probably the time to think about a longer-term gifting plan rather than making ad hoc handouts, ideally with the assistance of professional advice.
Get married?
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Hide AdWealth left to a spouse or civil partner is exempt from IHT, and that will apply to pension pots too. So for many people this might only become an IHT “problem” when they are the surviving spouse.
However, for those who are in a relationship but unmarried – whether co-habiting or not – the issue becomes more pressing. It could well be that many older couples in long-term relationships decide to tie the knot to make this problem go away, for a certain timespan at least.
Anyone who is married should check their pension death benefit nomination, as after this rule change it will be best for most couples. IHT purposes to stipulate that the pension is paid in total to your spouse when you die, rather than any portion left to children or other family members.
Ian Dyall is Head of Estate Planning at Evelyn Partners
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