Covering your inheritance legacy

For estates valued at below £2 million this will be in addition to an individual’s own nil rate band of £325,000, and conditional on the main residence being passed down to direct descendants (e.g. children, grandchildren). The proposed rules which govern this allowance will create another layer of complexity when considering succession planning, particularly for individuals considering the benefits of using relevant property trusts to mitigate inheritance tax, as the nil rate band will remain frozen until 2020/21.

One simple solution to provide for an inheritance tax liability is Life Assurance, both as a long or short term resolution. Life Cover written under an appropriate trust can provide reassurance for individuals particularly when there is uncertainty as to when the next generation should inherit or most importantly who should inherit.

The Life Assurance market continues to be very competitive with more and more insurers coming to the market looking to offer exceptional rates particularly in the area of Whole of Life Assurance. For example, a couple in their mid-50s could cover an inheritance tax liability of £1 million through a joint life second death plan, with guaranteed cover, at a cost of £576 per month. With monthly premiums having to be paid for more than 144 years before the cost of cover exceeds the sum assured, this type of plan is now also considered an inverted investment.