IHT Insurance Cover
The first place we usually look when considering ways to settle a future IHT exposure on your estate is insurance. This is usually a dirty work, however, in this case, it can make a lot of sense.
The type of policy we use to cover a client’s IHT is called a Whole-of-life policy. This policy covers you for the remainder of your life and as long as you continue to pay the premiums.
If we calculate that your estate may have an exposure of £300,000 upon death you could take out an index-linked policy for £300,000. This policy would be paid into a trust upon your death. This means your estate has immediate access to the funds in order to settle the IHT due and release the balance of the estate.
This type of policy works really well as it leaves you in full control of your assets in life and eliminates the need to make lifetime gifts or losing control of parts of your estate before death.
The price of the premium will depend on many factors such as age, health, life expectancy so all quotation will be different. The cost of a £300,000 policy we recently quoted for a 60-year-old male in good health was £301 per month. Premiums are more expensive than a similar value of term assurance policy due to the fact they are guaranteed to pay out in the future.
These can be ideal if you have unneeded annual income or income surplus. You usually need to survive over 90 years to pay in more than you receive so even though you will need to pay now for a benefit that you won’t ever get to see, your estate will be better off in the future.
For more information on using insurance to cover you IHT exposure or on other ways to do this contact a member of our team who will be happy to discuss the options with you.
Using Trusts for house Deposits
Gifts from regular expenditure
Family residence nil-rate-band
Pensions and inheritance tax
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