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How Claire’s Inheritance Tax Planning Saved Her Thousands

Claire, aged 68, had lived in Sheffield all her life. She had grown up there, gotten a university education and then settled down in Hillsborough when she married her husband, where they had three sons. However, when her husband left her unexpectedly in 1974, she and her three young children were left penniless and destitute.

With no financial support from her ex-husband and a young family to feed, Claire decided to forge a career for herself in education. She underwent teacher training and became a secondary school teacher. 

Several years later, Claire faced a potentially high inheritance tax bill. The value of her property had increased exponentially since she purchased it, and all the investments she made in the past had similarly gained value. As a result, she had an estate worth £700,000. 

This meant that she was faced with an Inheritance Tax bill of £150,000  (700,000 – 325,000 = 375,000        40% of 375,000 = 150,000) if she did not take any steps to plan for her estate. 

It was hugely important for Claire that her children were all provided for after she passed away. She wanted to ensure that all her assets were distributed to her sons and that they were comfortable after death. 

Therefore, Claire made substantial gifts to her sons from her savings. On advice from her Financial Advisor, she established a trust fund for her children, which gave them access to her savings and took them out of her ownership. This subsequently took these savings out of her estate and meant that there would be no Inheritance Tax charged on it. 

Claire also wanted her sons’ inheritance to be divorce-proof, having learnt the unpredictable things life can throw at you. She decided to create a Family Trust Will, which would be able to solve this problem if it ever arose. She also opted for a Probate Guarantee, which would provide her sons with access to a solicitor should they need to, at a significantly reduced cost. 

The most efficient way to give Claire access to these solutions would be through a Comprehensive Estate Plan, which provides her with storage for life. This plan also permits her unlimited updates on her will at any point, in case of any major life changes that need to be accounted for. 

Claire’s story highlights the importance of seeking financial advice when making plans for the future. Had she not done this, she would have been liable to pay a sizeable Inheritance Tax bill, which would have taken her estate out of her family’s control. 

To seek financial advice and make plans for your family’s future, contact us at Thornton and Baines:

Take a look at our Inheritance Tax guide to see how your personal situation may be affected:

Have a look at the case studies on our website to see how we’ve helped people who have found themselves in similar situations:

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