Estate, Trust and Tax Planning

Making the Right choices

Estate Planning involves reviewing your current finances. The aim is to arrange your finances in line with your financial planning. Planning can occur while the owner is alive or upon death. Taxation in the UK needs to be considered as more and more families are paying taxes.

There are several reasons why families should consider strategies to reduce taxes.

To reduce your estate’s Inheritance tax Bill

When a person dies, their estate may be subject to Inheritance tax.
The UK’s inheritance tax rate is 40% in the tax year 2022/23. Tax is payable on the amount over the current exemptions.

At the moment, the threshold for inheritance tax is £325,000. This means no inheritance tax will be due if the estate’s value exceeds £325,000.

If you own or have owned your home, the Resident’s Nil Rate Band could apply. This is an additional £125,000.

Estates, over the allowances, have to pay inheritance tax. The amount of tax will depend on the size of your estate, and larger estates will pay more tax.

Some exemptions and reliefs can reduce the amount of inheritance tax due. Gifts to spouses or civil partners are exempt from inheritance tax.

We recommend that you seek advice on inheritance tax planning from a professional. This ensures that you understand the implications of inheritance tax, and you can then make sure your estate planning is correct.

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Protection of Assets

Nobody knows what the future holds. It isn’t easy to plan for every situation.

Estate planning can protect assets from creditors and lawsuits.
Asset Protection is a proactive measure suitable for a wide range of issues, such as.

  • Making sure business assets are passed to the correct person.
  • Ensuring Assets such as business assets get protection from creditors.
  • Protection against marital disputes.
  • To protect your savings and investments from Long-term care costs

The Basics of Effective Tax and Estate Planning

The first step is to assess your current tax position. You should consider income tax, Capital Gains and Inheritance tax, and the annual investment return.

A qualified adviser should be able to help with these calculations and any potential inheritance tax charges.

You must understand the tax you or your estate might need to pay and when. This will then allow you to put your plan into action.

Determining how much money you need for the rest of your life would be best.

Many financial planners use cash flow planning software, which helps calculate how much money you need to maintain your standard of living.

At Consilium, we consider this to be your magic number. Any assets over and above this are more than you might need. The discussion then is what to do with these assets.


Ensure you have an up-to-date Will. Surveys suggest that 70% of UK residents still need one.

Having an up-to-date will is the foundation of good estate planning. A will is a legal document that outlines a person’s wishes and instructs executors on distributing your estate. It can include instructions for caring for dependents, such as children or pets.

Legacy Wills and planning

It might be worth reviewing even if you have an up-to-date will. Reviewing your will might enable you to check your inheritance tax planning options.

Lasting Powers of Attorney

You might have heard of a lasting power of attorney.
People tend to use them as they get older and become more critical.

But anyone with assets in their name should consider having one. An LPA is a legal document. It appoints people to act for you if you need help making decisions.

There are two types of LPA: a financial LPA that deals with finances, and a health and well-being LPA.

How to plan for inheritance tax

Trusts and Inheritance tax planning are ideally suited. Trusts are legal structures that allow you to transfer assets, and trustees are appointed to run the trust. The trustees then manage the assets on behalf of the trust.

The trustees are responsible for the management of the trust.

Trusts are used to create tax planning strategies, reduce taxes, protect assets, and provide for heirs over time. Several types of trusts are available, each with a specific aim. These include bare trusts, interest interest-in-possession trusts, and discretionary trusts.

All trusts have advantages and drawbacks, such as exit charges for chargeable lifetime transfers. Speak to an adviser to find out the best trust option.

Life Assurance, written in trust

Putting life cover in trust can have several benefits, including:

  • When setting up the trust, proceeds are not part of your estate. The policy proceeds are not subject to inheritance tax.
  • The benefits will pay out more quickly by placing the policy in trust, and this is because there is no need to go through probate.
  • Placing a policy in a trust protects the funds from creditors or legal claims.
  • The trust ensures that the funds are paid to the correct people. This is important if you have specific instructions about who should inherit.
  • Putting a life insurance policy in trust requires careful attention.
  • A trust is a legal arrangement; you must ensure it is set up correctly.

Use Investments that are tax efficient.

Some forms of Investments are more tax efficient than others, such as investments that are eligible for business property relief.

You need to hold these types of investments for at least two years.

If you keep the investment, it will be outside your estate for IHT purposes.

Other tax-efficient investments include ISAs. Instead, you could use assets listed on the AIM market.
All investments have advantages and downsides. We recommend seeking professional advice.

Charitable Donations

Your estate plans can include a provision for charitable donations. You can do this either by will or within a trust.

Ensure you keep your plans up to date.

You should review your plans each year and consider any changes to tax reliefs and legislation.
Your plans should adapt to account for changes in your situation.


Estate planning is essential to providing for your loved ones, and assets must be passed to the correct people.
Estate planning can help reduce taxes and protect and prevent family disputes. Inheritance tax planning trusts can make a real difference to your family.

Please get in touch to learn more about our Tax and Estate Planning solutions.

Consilium Asset Management provides inheritance tax planning in the Bristol area.  The Financial Conduct Authority does not regulate personal tax advice and some forms of inheritance tax advice.

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