Saving inheritance tax and maximising reliefs

Assets in the first to die’s estate, comprised of property and land held within a farming partnership.  There were some inconsistencies between the partnership agreement, the property ownership and the will. There were also two children and it was important to balance the needs of the farming and the non-farming child.

A new partnership agreement was put in place to reflect the true ownership of the partnership assets.  The will was varied by a deed of variation, which effectively enabled two bites of the same Inheritance Tax (IHT) cherry and the need for the spouse to survive only two years, rather than the usual seven, in order to save over £500,000 in tax. That advice, coupled with personal tax and estate planning for the surviving spouse will reduce the IHT liability on the second death by maximising IHT Agricultural and Business Reliefs.   We also prepared a new will for the surviving spouse to balance the interests of the farming and the non-farming children.

With careful tax and estate planning, liaising with accountants and land agents we achieved the best result possible for the surviving spouse and children.  We assisted the surviving spouse in completing the inheritance tax papers and applying for the grant of probate in their spouse’s estate.  This case demonstrates that whilst it is important to deal with the administration of the first to die’s estate, when coupled with expert personal tax and estate planning advice, not only was the desired outcome achieved, but also peace of mind for the next generation. Had things been left until after the death of the surviving spouse the extent of the planning would not have been possible and more tax would have been paid.