Inheritance tax planning is best when it’s simple

Inheritance tax planning is something that many clients don’t want to think about. Facing your own mortality isn’t easy and can involve some difficult decisions, particularly in complex and extended families.

By Jane Parry, head of tax, PM+M

That said, there can be significant benefits from doing some basic planning at the right time, providing reassurance that your affairs are in order and your family aren’t going to face a huge tax bill.

I always tell my clients to keep it simple. There are some fancy schemes out there, but they usually bring lots of complexity and can reduce future flexibility. More often than not, some sensible advance planning can achieve substantial benefits without the complexity.

That might be a mix of getting your will right, ensuring that ownership of assets between you, your spouse and your family is structured properly, making appropriate lifetime gifts, fully using available allowances and exemptions and getting your investment strategy right. We work closely with our financial planning specialists on the latter.

Trusts can be a great way of passing on wealth without losing control of it. Sometimes clients are wary of trusts and think they are too complex, but that really isn’t the case. They can be simple and achieve exactly what the client wants, without significant cost or complexity.

Family investment companies can also be effective in the right circumstances and we are seeing increasing numbers of clients using them. The key to inheritance tax efficiency is to think about it early and be open with your family.  Having conversations now can avoid problems later and pave the way for some effective tax planning.