Bloodline Planning – 9 Stages Of Inheritance Tax Planning For Your Bloodline

Bloodline Planning Strategies

Let’s start with a homage to the bleeding obvious – what follows is little more than a saunter through some of the issues and considerations relevant to Inheritance Tax planning, at the various stages of a life journey

We’re taking a lighter approach to serious subject matter, in the hope you just might stick with it to the end, and then be consumed by the urge to work with our team of Chartered Tax Advisors!

Bloodline Planning – right here, right now – let’s go!

Remember, ‘The secret of getting ahead is getting started’ – Samuel Langhorne Clemens, aka Mark Twain

Start by having a tax-efficient Will professionally written to properly reflect your wishes, and be sure you choose the right team of advisors

With complex problems like legacy planning for bloodline, no one person, or firm, has all the relevant insights. Even the smartest individual has only some of the knowledge

Success in any situation characterised by complexity is propelled by the kind of knowledge that can only be built up by deep experience

Digest this quote from Shaquille O’Neal’s Mom: “Later doesn’t always come to everybody, son!”

Shaquille’s response: ‘Those words snapped me into reality, and gave me a plan’

The moral of the story?

The very same applies to you, so start planning, right now! (and listen to your Mum!)

You’re married

So, you asked to snuffle the truffle, got a ‘yes’, and tied the marital knot, or civil partnership

Here’s the list of ‘Gifts in Consideration of Marriage’ that are exempt from Inheritance Tax, up to the following limits:


Parents £5,000
Grand Parents and Great Grandparents £2,500
Spouse to Spouse £2,500
Other donors £1,000


Within those same limits, one alternative is to make gifts to a Trust for the benefit of either spouse, or the children of either, or both, parties to the marriage

You’re a parent

The prospects of bloodline wealth preservation

We all make choices every time we step out of the front door, now it’s time to do that for your family

It’s time to have your Wills properly reviewed, again

Next, start thinking about tax-efficient structures for your children but be aware that any gift to, or for the benefit of, your own minor children is subject to Income Tax ‘Settlements’ legislation which means that you’ll be subject to Income Tax, at your highest marginal rate, on gifts exceeding £100 per annum

Parents, family and friends can contribute up to a total of £9,000 per annum to a Junior ISA for any UK resident minors

If you’re a parent who’s wealthy enough, and you’re minded to make a larger gift to your children, then consider a cash settlement into a Relevant Property Trust. Be aware that you cannot benefit in any way from the settlement or it will be rendered ineffective for Inheritance Tax purposes. You can also see what happens if one dies without a will!

A good test of your existing advisor’s mettle is to ask about Relevant Property Trusts. A pause, followed by a blank stare, followed by another longer pause, might be an indicator that it’s time to work with our team of Chartered Tax Advisors..

Children become adults

This is the time to consider giving assets directly to children. The good news is you no longer need Trust structures, but the bad news might surround the quality of decisions children are inclined to make early in adulthood..

Practically, it might make sense from an Inheritance Tax planning perspective, to at least consider making use of annual exemptions. You might not label it that way, but there’s a good chance you’re doing it already.!

When you think the time is right, and only you will know that, you could consider using the generous and valuable ‘Gifts from Normal Expenditure’ Inheritance Tax exemption to make more substantial gifts

There are additional sophisticated structures available to those with the wealth, and inclination to plan, using the full range of legal options available

If that’s you, let’s talk!

You’re a grandparent

Preserve your bloodline well being and wealth

There are loads of reasons to start planning as a new grandparent. I’ve thought of two already.!

It’s time to revisit your Will. Maybe you want to make specific provision for your grandchildren, both born and unborn?

Gifts to grandchildren are much more tax-effective. A simple ‘Bare Trust’ likely will suffice, but you will need professional input to get it right

First grandchild reaches age 8

The subject matter gets technical so, let’s ignore detail and gallop through some broad Inheritance Tax planning principles

Your grandchild is 8, so in 10 years (s)he will be aged 18, which is the age at which they can benefit ‘absolutely’ from a Relevant Property Trust

To the extent that the Inheritance Tax £325,000 exemption has not been used in the last 7 years, you can make gifts to a Relevant Property Trust without any immediate tax implication

These generous Trusts are subject to a tax charge at every tenth anniversary (they’re easily and legally avoided)

It follows that your grandchildren’s eighteenth birthday is then the earliest date at which money can pass to them, before any anniversary charges arise

The point is not for you to understand the detail of the planning. The point is that you appreciate there are legal technical Inheritance Tax planning solutions available, and for you to be consumed by the urge to work with our team of Chartered Tax Advisors..

You retire

Despite the high cost of living, it remains popular, but everything changes at retirement

Properly consider the level of income you require, and where it will come from. All the years you spent contributing to your pensions should now bear fruit, in the form of a ‘Pension Commencement Lump Sum’ (formerly known as ‘Tax-Free cash’) and/or income, which is taxable of course

If you have income-producing assets, consider whether you need to retain all or some of them and/or the income from them. Remember that ownership and control are two separate things. One without the other is entirely possible, you just need proper professional advice

Now might be the time to consider a ‘Family Investment Company’ as it may allow you to retire, and still take income

Maybe you want to downsize you home, and gift some of the surplus cash. Maybe you prefer another form of retirement structure where your assets are immediately outside of your estate for Inheritance Tax purposes, but you retain all of the income during your lifetime(s)

It’s time to review your property investments, and how you own them. There’s almost 1,000 tax exemptions and allowances in the UK and not one of them applies to property. So, time to take proper professional tax advice from our team of Chartered Tax Advisors

One of your parents dies

Parent dying

‘Sky rockets in flight, after-tax delights’ – Starland Vocal Band

Making the best of an awful situation, you’re likely hoping that your parents had the foresight, and good sense, to sort their own legacy planning

If that’s not the case, it may not be too late

In the right circumstances, it may be possible to put a ‘Deed of Variation’ in place which may facilitate retrospective Inheritance Tax planning

If it’s the first of your parents to die, there may need to be an exercise for the surviving parent to decide which assets to keep, and which to give away. Aim to maximise use of both parents’ Nil Rate Band and their Residents Nil Rate Band

If your parent left you a legacy, it may be a good time to consider whether you really need it and, if not, whether you should pass all, or some of it, to your children

At the risk of becoming boring, you should take professional advice from our team of Chartered Tax Advisors

Your spouse dies

‘You’re the first, you’re the last, my everything’ – Barry White

Ideally, your Wills were up to date, reflective of current wishes, and Inheritance Tax planning was current and relevant

If it wasn’t, you may have up to 2 years to put a Deed of Variation in place to make sure your late spouse’s estate is dealt with Inheritance Tax-efficiently

Focus on maximising both parents’ Nil Rate Band and their Residents Nil Rate Band

Now is definitely the time to give your financial deck a shuffle. Take a good long look at your own financial needs

Be realistic about your life expectancy (Google will help you with Office for National Statistics (ONS) data for the UK, and it’s surprisingly accurate – if you’re brave enough!) and consider giving away any surpluses

Right at the start we said we’d outline 9 stages of Inheritance Tax planning for your bloodline, but there might be a tenth:

You marry again

Marrying into a bloodline

‘To argue with a person who has renounced the use of reason, is like administering medicine to the dead’ Thomas Paine

We’ve been doing this a long time and there are lots of reasons to remarry, some of them entirely sensible!

Whatever your reasons, you need to consider your new combined estate, and see if there are surpluses that can be given away, how that should be done, when, and to whom

Passing on wealth to the people that matter to you, and to your new partner, might not mean equal shares because, as George Orwell wrote ‘all animals are equal, but some animals are more equal than others’

Finally, and importantly, you need to re-visit your Wills. If they were not ‘made in contemplation of your new marriage’ they are rendered void!

OK, that’s it for now. Time for me to rev-up, and do the thing you do after you’ve revved-up, but before I go..

Let’s work on what could be, and forget what is..

The UK has one of the most complex tax structures in the world, with around 18,000 pages of tax laws, and nearly 1,000 tax reliefs and allowances. You can’t know them all. That’s a job for our team of Chartered Tax Advisors (CTA’s)

At outset, we ask you to visualise the future you want for your family legacy then, with the help of our team of CTA’s, you work back to today, using informed choices. Our CTA’s provide you with your legacy planning strategy, and all the tools you need to realise your vision

Once your Inheritance Tax planning is finalised, and paid for, you may be invited to become a full member of our Resource Optimisation Program (ROP) where our CTA’s will continue to work with you, to aim to maintain everything for you while you’re alive, and they’ll even handle probate for your beneficiaries when you die, and then work with your children, if that’s what you want..

How’s that for peace of mind..

ROP provides you with 3 options: our CTA’s will implement, maintain and manage everything, or our CTA’s will work with your existing advisors, or you can do it all yourself. That’s ‘Done for you’, ‘Done with you’ or ‘Done by you’

Contact us HERE to talk to an expert, for FREE

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