The Chancellor unveiled his budget on 15th March but from the point of view of inheritance tax and estate planning there was no new announcements.

It had been announced in the 2022 Autumn Statement that the inheritance tax thresholds would remain at their current levels until April 2028 and so this gives some clarity as to the position over the next few years.

On that basis it is worth summarising some key points.

For a married couple or those in a civil partnership, they have inheritance tax allowances of up to £1,000,000 between them available on death.  With this in mind, it would be important to ensure that your wills are up to date so as to maximise the use of these allowances.  This is particularly the case where one member of the couple had a previous marriage or civil partnership that ended on death.  If that is the case, there is the possibility of bringing in the deceased’s allowances too and so if this may be relevant to you, it would be important to take advice.

There are still steps that can be taken during someone’s lifetime to mitigate a potential inheritance tax liability.  Gifts can be made during someone’s lifetime to take into account their annual inheritance tax exemption.  Another exemption that tends to get overlooked is gifts out of surplus income, whereby, an individual can make a gift for inheritance tax purposes of any amount from their surplus income, but it is important to take advice on making this type of gift to ensure that it is recorded properly.

Various other lifetime exemptions are also available, including gifts in consideration of marriage or civil partnership, which again is an exemption which is often overlooked.  You can make a gift to either or both parties to the marriage/civil partnership which is exempt from inheritance tax, with the actual amount that is exempt depending on your relationship to the couple.

Again, it would be sensible to take advice on this and it should be noted that these exemptions can all be combined with each other so that relatively significant tax savings can be made over the course of time if gifts are properly planned.

Colman Coyle has considerable experience in advising in relation to lifetime tax planning and the preparation of wills and related issues and if you would like to discuss the issues raised here, please contact Patrick Green on 0044 0207 354 3000 or Patrick.green@colmancoyle.com.

Patrick Green

Senior Associate

An article in the Sunday Times on 30th January highlighted some of the problems that can arise with gifts or loans between family members and buying a property.

In the particular case discussed in the article, a couple married and the husband’s father lent his son £250,000 as a deposit for the couple to purchase a property.

The couple bought the property but tragically, the husband died young and unexpectedly.  His father then requested the loan to be repaid and it transpired that the widow had never been aware that what she thought of as a gift to herself and her late husband was in actual fact a loan and had to be repaid.

Whilst this case is undoubtedly very sad and, in some ways, specific on its facts, it does highlight some of the risks involved in financial arrangements within families, the importance of openness between all parties and ensuring that all documentation is drawn up and available.

For example, parents lending money or gifting money will want to have this recorded and could well be concerned about potential divorces in the future.  Equally those receiving money need to think about things like life assurance and their own wills and possible pre- or post-nuptial agreements to ensure that they have the legal framework in place to cope with unexpected problems that can sadly arise.

Colman Coyle has considerable experience in advising in relation to life time gifts and the purchase of property as well as the preparation of wills and related areas and if you would like to discuss the issues raised here, please contact Patrick Green on +44 (0)20 7354 3000 or patrick.green@colmancoyle.com.

Patrick Green

Senior Associate

An article in the Sunday Times on 3rd October highlighted how the increasing variety in family structures is a factor leading to increased litigation following a death of a family member.

The article picked up on some high profile disputes and mentioned that the number of cases has probably risen by around 50% in just a couple of years. However, the full extent of this issue is harder to gauge as the vast majority of cases never reach the court, but it is probably fair to say that there are numerous disputes of this type every year.

Often, people face a dilemma as to how they may benefit their spouse or partner on their death but also make provision for their own children, step-children, and indeed other relatives.  This dilemma is often at the heart of the problem but probably the best advice, is that doing nothing and hoping the issue will resolve itself is not likely to help matters.

The key to avoiding, or at least minimising, these issues lie in having a properly drawn up will which is flexible enough to reflect the interests of different family members. In particularly difficult or complicated family situations, leaving guidance or a letter of explanation as to why things were done in a certain way can often be a great help, as can raising issues during one’s lifetime.

Whilst people are free to leave their estate on their death as they wish, there is also legislation which allows certain categories of potential beneficiaries such as spouses, children, and others to make a claim against the deceased’s estate on the grounds that reasonable financial provision has not been made for them.  Such a claim is not guaranteed to succeed but it is something to bear in mind when drawing up your will, as the costs of a disputed will or inheritance can be considerable.

Colman Coyle has considerable experience in advising in relation to the preparation of wills, and estate planning, as well as advising family members after a death, and if you would like to discuss the issues raised here, please contact Patrick Green on +44 (0)20 7354 3000 or patrick.green@colmancoyle.com.

Patrick Green

Senior Associate