5 Top Tips for Wills, Life Insurance and Inheritance Tax



The world of wills and inheritance can feel tied up with life insurance and tax complexities. Pulling away from all the technical jargon and legal wrangling, here are five tips for understanding some of the options:

old will
  • Put Money in a Trust Fund

    Simply put, a trust fund is money controlled by someone (the trustee) for the benefit of someone else (the beneficiary). The trustee must follow whatever rules are set out in the trust for using the money – it’s a great way to a friend of relative control some of your money the way you want it used when you are not able to do it yourself.

    Importantly for inheritance and life insurance – money placed in trust does not count as part of the estate, and so is exempt from IHT.

    It is possible to set up your life insurance so that it is placed into trust upon your passing – separating it from your estate and not losing a portion of it to tax.

    If you are expecting a large inheritance tax bill upon your death, then you can take out a life insurance policy to pay into a trust dedicated to paying the IHT – keeping such expenses away from your heirs. This can help considerably, especially if most of the estate value is tied up in assets, such as property.

  • Plan your Life Insurance

    You might have it in your head that your life insurance is meant to pay for certain things – the mortgage, your daughter’s university fund, your son’s marriage – but have you remembered to tell anyone else your plans?

    Planning out what you intend your life insurance to be for and then writing that clearly into a will can save your family a huge amount of headache (and potential warring) when you are gone.

    No one likes to think that on their death their loved ones would be bickering about their possessions and money, but it happens a lot. When you include the sizable sum life insurance can add to the estate, those arguments only become louder

    Spend the time it takes to have your wishes clearly spelled out.

  • Seek Professional Advice

    The world of personal finances can be complicated. Happily, plenty of people have dedicated themselves to understanding all the ins and outs of the different processes and are here to help. It might seem expensive to have a financial advisor or solicitor on-hand to work through your finances, but it can save a fortune in the long run.

  • Never Get Family Help Writing a Will

    It may seem sensible to use the people you trust the most to help you write your will, but your family are also likely to be those inheriting your money and even if you know none of them would ever cheat or betray you, there are those who won’t agree.

    Should anyone think that your will has been directed or manipulated by one of the beneficiaries, the will is likely to be contested and all the hard work you did preventing conflict was all for naught.

    Writing a will is one of those times when working with strangers and keeping your family at a decent distance is best.

  • Give Gifts to Avoid Inheritance Tax

    You are entitled to give away £3000 worth of assets as a gift to a loved one each year. If you worry that the items and money you want to put aside for your children and grandchildren will be lost or taxed away, then why not give it to them during your lifetime?

    Not only does this help with lowering a potential tax bill, it also allows you the joy of seeing your gifts used while you are still alive.

    For more information on life insurance, inheritance tax and writing a will, read our articles and guides here at Compare UK Quotes. If you want financial advice or would like to speak on any subject, fill in our contact form and have one of our advisors call you at a time convenient to you.

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By Crispin Bateman

on Tuesday 31 July 2018