Wills

Question 1

Recommend and justify the actions ***** should take to ensure their estate planning objectives can be met and the inheritance tax liability on second death is minimised.
Your answer should not include any gifting or insurance based solutions.

Answer 1

Wills

1. Write new wills.
2. Include instructions for how assets should be split between step children and specify that the property should be passed directly to the children to take advantage of the residence NRB.
3. The Wills should include Will trusts/immediate post death interest trusts equal to their available NRB on death plus 100% of prevailing NRB to ensure that full advantage is taken of them both inheriting NRB from deceased spouse.
4. This also removes capital/future growth from the estate of the survivor.
5. The trust should specify that surviving spouse has right to income for their lifetime/has the life interest.

Ownership
4. Change ownership of house to tenants in common to ensure they have sufficient assets in their own names to be able to make use of their increased NRBs

Pension funds

5. Set up APTs and nominate pension funds to be paid into them on first death to ensure that pension funds pass to children on second death/avoids the possibility of the survivor nominating a different beneficiary on their subsequent death.
6. Use other assets before pension funds to provide income to ensure as much of the IHT efficient estate as possible is preserved for the children.

Miscellaneous
7. Invest in BR qualifying investments to remove assets from the estate/reduce IHT payable on second death.