Inheritance Tax, Succession and Estate Planning

A typical succession planning process will be as follows:

• Getting to know you and your aims;
• Strategising – considering your options and preparing a bespoke plan;
• Implementation;
• Keeping the plan under review during your lifetime.

Succession planning requires timely advice and action. You will be rewarded by starting as early as possible, particularly ahead of important events (for example, selling your business).

A Will and Lasting Power(s) of Attorney are always to be recommended and are also an excellent starting point.

Depending on your assets and aims, you might also consider lifetime gifts, and specialist vehicles such as family investment companies, limited liability partnerships and trusts.

We do not advocate complex vehicles for the sake of it. We appreciate the benefit of simplicity and much of our advice will be about how to keep things simple.

• Inheritance Tax mitigation and planning, including advice on reliefs and exemptions
• The treatment of all types of UK and overseas trusts, including the implications of a settlor or beneficiary moving to the UK and establishing “excluded property” trusts
• Establishing new structures to hold personal and business assets, both in the UK and overseas, including trusts, partnerships and companies
• Other inheritance tax planning strategies, for example through the use of life insurance trusts and pensions
• All aspects of lifetime giving, including philanthropic and environmentally / socially responsible investment
• Lifetime transfers / gifts to individuals, trusts and companies
• Pitfalls arising from imperfect inheritance tax planning strategies and mitigation.

Yes, Kingsley Napley’s Private Client and Corporate & Commercial teams work together to assist clients with setting up and managing Family Investment Companies.

To learn more about the advantages and disadvantages of using FICs for succession planning, please see our Family Investment Companies factsheet.

A Will is one important aspect of estate planning. A successful estate planning strategy however encompasses a number of additional actions, including:

• Review of your assets and structuring considerations – ensuring your hard-earned assets and business or investment interests are protected for the next generation through careful structuring and organisation.
• Tax planning – considering how your exposure to the main personal taxes can be minimised so as to preserve your wealth.
• Gifting – to individuals or charities during your lifetime in the most tax efficient way, whilst ensuring you are left in a comfortable position.
• Preparing Lasting Powers of Attorney (LPAs) – to choose who manages your financial and health decisions in the event you lose mental capacity.

A Private Client solicitor is only one of the advisers needed to undertake a successful estate planning exercise. We regularly work with accountants and financial advisers to ensure that all aspects are covered.

• Control – You decide on the ultimate destination of your assets, who manages your assets on your behalf in the event of your death or loss of capacity and who takes on important personal roles such as guardianship of your children.
• Asset protection and preservation – A key focus of any estate planning exercise is ensuring that assets are preserved and protected for the next generation and that any family arguments or third-party risks are avoided. This might for example involve the use of trusts to protect vulnerable beneficiaries.
• Minimising Inheritance Tax (IHT) exposure – IHT is currently charged on an individual’s estate at a rate of 40% over the nil rate band of £325,000. A holistic estate planning exercise will look at how your estate can be structured so as minimise the erosion of your estate by IHT.
• Peace of mind – Perhaps one of the most significant benefits of estate planning is the peace of mind it provides. It can bring great comfort knowing that your affairs are in order in case the worst happens.

There is no set age at which you should think about estate planning. Too many people put it off or think they are not wealthy enough. Even for fairly modest estates, the loss of time and money that can result from a lack of planning can be very detrimental.

Often significant life or personal events are a good prompt for starting the estate planning process or reviewing your estate plan, for example, getting into a serious relationship, having children or buying a house.

The level of cost for estate planning varies, as it depends on the needs and circumstances of each individual and the level of complexity.

At Kingsley Napley, we aim to provide certainty on costs from the outset by charging fixed fees for the preparation of Wills and LPAs. For advice on IHT mitigation or gifting we provide estimates of our fees based on our hourly rates.

As part of our estate planning service we can also advise you on simple, practical steps that you can take without the involvement of a professional.