Should/can we use an IFA for an estate of our size?

pinkteapot

Hubby and I had a shock last night when we worked out that if we both die, our estate would be worth about £1.1m. :eek:

In large part due to us both having life assurance policies (though decreasing term so these will shrink in the future) and good death in service cover at work.

So not due to our house and savings, though that's about a third of it.

We then realised that that would lead to a pretty hefty inheritance tax bill.

We don't have wills but this has now jumped up the priority list of jobs to get done in the new year! We're in our early 30s so have been putting it off, but we have to do it.

Anyway, getting to the point, would it be a solicitor or an IFA who could advise on inheritance tax planning, etc? I assume an IFA, but I have a feeling that we're not high net worth enough for an IFA to be interested in having us as clients...

What do other people do?

Crabapple

I would check with the providers, but normally both life assurance payouts and death in service benefits are paid direct to a nominated beneficiary and are outside your estate for IHT purposes.

If that is the case then you are likely to have far less of a problem! Check to see that the policies are nominated and that you have specified who you would like the funds to go to. The companies will be able to tell you whether a payout on death would pass into your estate or not.

Definitely make Wills in any event. Speak to a Solicitor initially but you might still want to take advice from an IFA - they can give you general advice about investments and income as well as IHT planning. That said, there is not a huge amount that can sensibly be done, but there are always new schemes being touted.

g6jns_2

pinkteapot wrote: »

Hubby and I had a shock last night when we worked out that if we both die, our estate would be worth about £1.1m. :eek:

In large part due to us both having life assurance policies (though decreasing term so these will shrink in the future) and good death in service cover at work.

So not due to our house and savings, though that's about a third of it.

We then realised that that would lead to a pretty hefty inheritance tax bill.

We don't have wills but this has now jumped up the priority list of jobs to get done in the new year! We're in our early 30s so have been putting it off, but we have to do it.

Anyway, getting to the point, would it be a solicitor or an IFA who could advise on inheritance tax planning, etc? I assume an IFA, but I have a feeling that we're not high net worth enough for an IFA to be interested in having us as clients...

What do other people do?

The first thing is to make wills. A specialist in financial planning is the second stop. Choose very carefully. Don't use a one man band

pinkteapot

Thanks, both. Good point re death in service - they both have nominated beneficiaries and account for about £260k of the total.

Neither life assurance policy was set up in trust so no named beneficiaries and therefore I believe they'd form part of the estate.

getmore4less

The first thing couples need to do is be married/civil partners.


If a couple nominate each other on anything in trust it becomes part of the joint estate anyway so not a lot of use if that takes the total over the joint nil rate band


Don't forget to include the generation above and below, no point in planning yours and then get lumbered with a few £100k from family that makes a mess of the planning.

general approach assets down the generations income up(that's how families preserved assets for years) and hope people don't die too soon.

Research and paid for help will help you clarify where to go with this.

One option some overlook is spend a bit.

Savvy_Sue

pinkteapot wrote: »

I assume an IFA, but I have a feeling that we're not high net worth enough for an IFA to be interested in having us as clients...

We've used an IFA for pension planning for DH (my peanuts aren't worth worrying about) and they've been quite happy to do that small amount of business with us. They've run over the basics of IHT planning as well, but we're unlikely to need to worry about that. (Actually, since it all goes to the other on the first death, and the survivor's going to be dead before it's an issue, we really don't need to worry at all, except insofar as we'd prefer our sons to have our money rather than the government.)

TBagpuss

Talk to a solicitor first. They will be able to advise about IHT planning (look for a solicitor who is a member of STEP).

Many solicitors will also be familiar with IFAs in their area and may be able to suggest someone who would meet your needs. Also, if you have had the initial legal advice you will have a clearer idea of what information and advice you want / need from the IFA

Mattygroves2

Accountants are another source of good IHT planning advice. Again look for one who is a member of STEP or one who has lots of practical experience in capital taxes (they will often do CGT planning as well).

So my choice would be accountant to do the planning and then solicitor to write the will to enact the planning. Or solicitor to do both at the same time. Sort the easy things out quickly though - death in service and life assurance outside the two of you (assuming you could manage alone without their benefits) otherwise you'll have an IHT problem on the second death.

Might be worth thinking about whole of life cover as well to sort the tax liability out when it happens - this will be cheaper if you do it now rather than wait until the first death. If you're over the threshold in your 30s the position is only going to get worse as your wealth grows with age (if nothing else from house price rises and paying the mortgage off).

I would have thought that IFAs were more suited to sorting out investment portfolios in life rather than planning the tax consequences of death. However, that is only my personal opinion and happy to be contradicted but unless they take their CPD seriously they will struggle to keep up with changes to tax legislation.

getmore4less

Whatever you you do if you are creating wealth understand what these paid people are telling you.