Received an inheritance? Why it’s time to review your estate planning
Receiving an inheritance can bring significant changes to your financial circumstances. At what is often already an emotional time, reviewing your own Will and inheritance tax position may understandably not be at the top of your list. However, taking advice at an early stage can help ensure your inheritance is managed in a way that works for you and your family, both now and in the future.
Inheriting from a loved one’s estate can be an emotional and life-changing experience. While much attention is often given to the administration of the estate itself, it is critical for a beneficiary of an estate to review their own Will and inheritance tax planning – even in advance of receiving the inheritance itself.
An inheritance may significantly increase the value or make-up of your estate, potentially influencing the distribution of your own estate under your Will and likely increasing the amount of inheritance tax that is payable when you pass away. A review of your Will and inheritance tax planning may highlight opportunities to make use of available exemptions, consider lifetime gifting strategies or explore trusts and other planning options where appropriate.
In particular, the inheritance tax rules around gifting of an inheritance differ from that of gifting of one’s own estate. I like to call this the ‘best of both worlds’: (1) not giving up your inheritance either wholly or in part; and (2) managing your inheritance tax liability. In the case of the rules on gifting from one’s own estate, it is often very difficult to achieve both. Additionally, there is plenty of information online about a Deed of Variation that redirects your inheritance to another individual – again, this only achieves one of our two worlds. However, in the case of gifts from an inheritance, the best of both worlds can be readily achieved through careful planning without being onerous or cumbersome.
Any such review – and decisions from that review – must be implemented within two years of the date of death of the loved one. Therefore, whilst there is no immediate rush to do so, one must have some level of planning so as to not leave everything to the last minute. I often suggest that, once you have a vague idea of the likely inheritance, you have enough information to have a productive discussion. Even relatively low value inheritance can still benefit from this level of planning.
If you have recently received an inheritance, or expect to receive one, taking advice sooner rather than later can help you understand the options available and how they may fit into your wider estate planning.
Our experienced Private Client Team can review your Will and inheritance tax position and provide advice tailored to your individual circumstances, helping you make informed decisions about your inheritance and your family’s future.
Thomas Woodlee is a Senior Associate Solicitor in the Private Client Team at Barker Gotelee Solicitors in Suffolk.
For more information on our range of legal services, including advice regarding inheritance, Wills and inheritance tax planning, please call the Private Client Team on 01473 611211 or fill out our enquiry form.
