Whole of Life – Inheritance Tax Planning

Mrs L (77) has been a client for a number of years. Widowed over 10 years ago and without children she has built significant savings and investments. An inheritance following the death of her brother increased the value of her estate to approximately £800,000. Conscious of her likely Inheritance Tax position she is also conscious of her potential needs for care in later life and for that reason has avoided solutions which would take money out of her control by making gifts and using trusts.

Banks Wealth Management restructured the client’s investments in order to generate an increased income, from which a ‘whole of life’ insurance policy was set up to provide a £60,000 lump sum when she dies. This is expected to meet the likely inheritance tax bill based on current calculations. The policy is set up in trust and will pay to the executor of her estate so that settlement of the estate can be made to her extended family and close-friends in accordance with her wishes and without paying unnecessary tax. The policy premiums are such that she would need to have paid premiums into her 95th year before the cost of premiums exceeded the payment of the policy benefit.

The Financial Conduct Authority does not regulate Tax, Trusts and Estate Planning and Cashflow Modelling.