“However, if there are reservations about gifting to family members, whether that’s because they do not trust them to spend it wisely or they are concerned about losing control of the asset, then there are other routes advisers can help their clients traverse.”
For example, although life insurance does not reduce the IHT liability, it can provide the funds to meet the cost of it.
Therefore, family members can use the policy proceeds to meet the liability upon death.
Moore says another tax-efficient tool to potentially reduce IHT liability is pensions.
Saving into pensions can be a tax-efficient way to accrue wealth while also improving the IHT-efficiency of the estate.
Generally, defined contribution pension plans are not included as part of an individual’s estate for IHT purposes.
Ima Jackson-Obot is deputy features editor at FTAdviser
