Estate Planning case study

The Client’s Objectives

The client approached us to better understand their estate planning and succession planning options. Their primary objectives were to:

• Plan for succession for their children and grandchildren

• Safeguard assets, including protection from third parties

• Reduce the value of their overall estate

• Retain flexibility during their lifetime

• Continue to rely on income generated from some of the properties

• Maintain access to cash assets for personal use

Fact Find and Consideration of Options

We undertook a detailed fact-find to understand the client’s circumstances, assets, and future intentions. Given the variety of assets, we considered a few different estate planning options.

We also put the client in touch with an independent financial adviser (IFA) to discuss the potential options available in relation to both succession planning and broader lifetime financial planning, which they subsequently considered before proceeding.

A key consideration was the client’s expectation of ongoing reliance on rental income from certain properties, alongside the desire to retain flexibility with cash assets during their lifetime. We also discussed the relevance of inheritance tax planning tools, including chargeable lifetime transfers (CLTs), potentially exempt transfers (PETs), and the operation of the seven-year rule.

Our Advice

We recommended an estate planning solution enabling the client to begin reducing the value of their estate while retaining sufficient control and flexibility by implemeting a discretionary trust with an interest in property owned by the client, utilising the client’s available inheritance tax nil rate band of £325,000. The client would be a trustee and retained powers to appoint new trustees and beneficiaries. Other trustees included the client’s children and a sibling.

The discretionary trust was intended primarily to support education and maintenance, while allowing the trustees discretion to make distributions as they considered appropriate.

After further discussions, and once the client confirmed they wished to proceed, we drafted the trust documentation.

Outcome

This estate planning arrangement enabled the client to reduce the size of their estate, safeguard assets for future generations, and retain flexibility and control during their lifetime. The structure also provided scope for further estate planning in the future.

We also put the in touch with an IFA to discuss the potential options both in terms of succession planning and general lifetime financial planning – which they took up and considered before proceeding.