Case Study - Will Writing

Background

• The clients were unmarried and had one child. They did not wish to marry.
• The estate was in excess of the 2 Nil Rate bands, (i.e. £624,000 or £312,000 each) being close to £1,000,000 in total.*
• If one died, as they were not married there would be no spousal exemption. This means the survivor would have an instant inheritance tax bill of £80,000 which would need to be paid on first death!
• Their son was a minor.

What we did

• Firstly, guardians were appointed to look after the minor. Advice was given as to who to consider for this role.
• A Nil Rate Band Discretionary Trust Will was created, thus maximising the inheritance tax savings and ensuring maximum flexibility and security for the surviving partner.
• Advice was given to the clients about who the Trustees should be.
• A bespoke Will was written, exactly matching the requirements of the clients.

The Results

• There was a total inheritance tax saving of half the estate (from 33% to just 16%).
• The avoidance of the need to have paid £80,000 on the death of the first partner.
• Guardians and Trustees were in place to ensure that the child would be adequately provided for and protected in the event of the death of both parents
• Case referred back to Financial Planners to devise a plan to reduce the Inheritance Tax bill to zero.
• Total tax saved was over £300,000.

* Tax rates, calculations and allowances correct at the time of publication – Feb 2009.

....because Wealth Matters

The Financial Services Authority does not regulate Will writing, school fees planning, taxation and trust advice, and some aspects of buy to let mortgages, overseas mortgages and commercial mortgages.