Start by working out the cost of doing nothing

Inheritance tax planning usually starts with a product. It should start with a number — and that number is often smaller than people fear.

The number first

Before any arrangement is considered, it is worth knowing what the liability would actually be today, on current rules, if nothing at all changed. That calculation takes an hour and it changes the conversation.

Sometimes it reveals a problem worth acting on. Often it reveals that the available allowances already cover most of the estate, and the right answer is to do very little and keep access to your own money.

Everything has a price in access or control

The arrangements that reduce a liability almost all work by removing money from the estate, which means giving up access to it, control over it, or both. Gifts are effective but gone. Trusts keep some control but add cost, complexity and their own tax treatment.

That trade-off is the real decision. A plan that leaves someone anxious about their own finances at eighty has not succeeded, whatever it saved.

Time is the other cost

Several of the common routes only become fully effective after a period of years. Planning started early has options that planning started late does not, which is the main reason this conversation is worth having before it feels urgent.

Who does what

Quantifying the liability, modelling what you can afford to give away, and advising on investment-based routes is financial advice. Drafting the will, the deed or the trust is legal work, and belongs with a solicitor.

Any adviser who offers to do all of it should be asked which part they are regulated for.

This article is general information, not personal advice. Tax and regulatory rules change, and what is right for one household can be wrong for another. Take advice on your own circumstances before acting.

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