Estate planning while retaining access

Strategies to help clients plan for inheritance tax while keeping control of their wealth.

Helping clients retain access to their capital

Clients often think planning for inheritance tax means giving away wealth in their lifetime. When they make a lifetime gift, the client loses access immediately and permanently.

But an investment that qualifies for Business Property Relief (BPR) stays in the client’s name. That means an investor can request a withdrawal if they need to, as long as there’s liquidity available.

BPR-qualifying portfolios invest in the shares of unquoted companies or companies listed on the Alternative Investment Market, so clients must be comfortable with the risks associated with BPR investments. Read more about the risks.

Let’s look more closely at planning ideas that could help clients leave more to loved ones while keeping access to their capital.

Planning ideas

Planning ideas for clients

Wants access to capital

Scenario

Clients who want to plan for inheritance tax often feel uncomfortable giving away wealth in their lifetime. They may be concerned about needing money in the future, perhaps to pay care fees.

Opportunities

These clients could benefit from making an investment that qualifies for relief from inheritance tax. This would remain in their name and they could request a withdrawal at any time, as long as there’s liquidity available.

Solutions

BPR-qualifying investments

ISA investors

Scenario

Clients who’ve built up large ISAs and have an inheritance tax liability can be reluctant to sell down their ISA investments for estate planning.

Opportunities

Clients can hold certain shares in an ISA that qualify for inheritance tax relief. They could move some or all their ISAs into an inheritance tax-efficient portfolio.

Solutions

Octopus AIM Inheritance Tax ISA

Power of Attorney in place

Scenario

People with Power of Attorney (POA) over a client’s financial affairs may be unable to make lifetime gifts on their behalf if the client has lost capacity.

Opportunities

An investment that qualifies for inheritance tax relief could be an option for clients who have a POA in place that previously expressed a wish to plan for their estate. The investment remains in the investor’s name and can be accessed if needed in the future, as long as there’s liquidity available.

Solutions

BPR-qualifying investments

Late estate planners

Scenario

Later-life clients can feel they’ve left it too late to plan for inheritance tax. At this point, approaches like gifting or life insurance may not be attractive.

Opportunities

Clients could pass on more to loved ones after just two years by making an inheritance tax-efficient investment. This is faster than making a lifetime gift, which typically takes seven years to be effective.

Solutions

BPR-qualifying investments

Risks

Risks to keep in mind

Capital is at risk

The value of an investment, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest.

Tax relief can’t be guaranteed

Tax treatment depends on individual circumstances and tax rules could change in the future. Tax relief depends on portfolio companies maintaining their qualifying status.

The investment may be volatile and difficult to sell

The shares of AIM-listed and unquoted companies could fall or rise in value more than other shares listed on the London Stock Exchange’s main market. They may also be harder to sell.

Contact us

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Speak to a member of our team to discuss tax-efficient options for clients who want to retain access to their money.
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Key documents

Key documents

Octopus Inheritance Tax Service brochureDownload
Octopus AIM Inheritance Tax Service brochureDownload
Octopus AIM Inheritance Tax ISA brochureDownload

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