Inheritance Tax planning scenario
Janet is in her early 90s and has been reluctant to do any inheritance tax planning. She has significant capital assets but, as she has enjoyed good health so far, and wants to make sure she can fund the best possible residential care, should this become necessary in her old age. After a number of conversations on the subject, she has finally decided that she would far rather leave her wealth to her children and grandchildren as opposed to paying 40% of it to HMRC on her eventual death. Due to her advanced years, setting up a family trust is not a viable option, notwithstanding her good health. For this type of planning to be completely effective she would need to survive 7 years! Fortunately, we can recommend a suitable alternative; a Business Property Relief (BPR) investment. By investing in BPR shares, she will be able to pass them on to the next generations via her will and there will be no inheritance tax payable if she survives 2 years. There are various types of BPR product, and for a more cautious investor there are schemes specifically designed to manage investment risk.