“Dying Tidily” – Arranging Your Estate before Death to help avoid an investigation

NOTE: This post is more than 12 months old, and the information contained within may no longer be accurate.

We regularly give advice to individuals, who as part of a long term financial planning strategy, are looking to minimise inheritance tax across their estate, particularly investments and pensions.

As many of our clients are around 60 to 70, it is common that there is little they can do to minimise inheritance tax, nor would they want to, as their life expectancy can be many decades!

However, there are simple steps that individuals should take, and continue taking, that will help their dependants, and those dealing with their estate on death to deal with HMRC efficiently and potentially minimise the risk of an investigation.

The HMRC website is an excellent resource, for reading more about their view on pre-death estate planning. However, this article is focused more on the things that you should consider doing, where you cannot afford to give assets away but would like to make your beneficiaries’ lives simpler.

  •  Make A Will – If you do not have an appropriately worded Will, your estate will be dealt with inflexibly, under the laws known as “intestacy”.
  • Maintain Logs – as a bare minimum you should have a log of all your assets, and where they are. Useful information to include would be the provider, any policy or account number, the type of plan it is (for example pension, deposits, ISA) the current value, and if different, the death benefit. Take the time to ensure that you have included any less obvious “assets”, for example, employer death in service schemes.
  • Record Gifts – if you do make gifts, it is useful to understand how and when these were made so it is recorded whether they are potentially exempt, totally exempt, or have paid inheritance tax in your lifetime. The supplement to the Inheritance Tax account form (IHT 403) can be very useful to this end, and we actually recommend clients keep this updated as it highlights the requirements the Revenue would have on death.

The guidance on the HMRC website will be useful in understanding what you can and can’t give away, and should you require further advice on making provisions for dealing with inheritance tax, please do not hesitate to contact us. Of all the steps above, ensuring you have a current and appropriate Will is the most important, and you should take your time to coach your Executors on their responsibilities.

For those that have found themselves with executorship thrust upon them, their responsibilities are onerous, and will form the basis for a future article.

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24 Nov 2021

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