Last month we wrote about pension funds and the new regime affecting how they will be accounted for, for the purposes of Inheritance Tax (IHT), from 2027.
This included a statement that pension funds are generally outside of your Estate for legal purposes and not part of your Will.
In the last month we have seen two occasions where private residences were also considered to be outside of the taxable estate.
We have had two identical cases where somebody (not a previous client) contacted us because their house was put into a Trust many years ago, on the recommendation of an adviser, to protect the house from care home fees.
They contacted us because, after 10 years of such a Property Trust, there is a lifetime IHT charge that comes into play. The details of how this applies is beyond the scope of this article.
At George Hay, when undertaking any tax or estate planning, and in the provision of our will-writing services, we place importance on providing a complete financial overview that takes into consideration all assets.
In neither case did the individuals realise that the House Trust was not part of their Estate for the purpose of their Will, and that what would happen to the house on their death was determined by the provisions of the Trust deed.
In one of the cases this was totally different to the individual’s present wishes. Now a client of the firm, they must make a decision about whether the Trust will be collapsed.
Collapsing the Trust will have cost implications, but may deliver IHT savings and, most importantly, would allow the assets to pass according to the individual’s wishes.
These instances emphasise the importance of needing to consider your assets and long-term financial objectives together, before making such a significant decision.
GH Wills Ltd provides and writes Wills. For advice contact Carol George or Barry Jefferd on 01480 426500 or email wills@georgehay.co.uk.
Our sister businesses, George Hay Chartered Accountants and GH Probate Ltd work together to provide a complete proactive client service.
