Nigel Lawson, former Conservative Chancellor, and‘ Domestic Goddess’ Nigella’ s father, famously once said, " Inheritance Tax is voluntary tax- you can either do nothing and volunteer to pay it, or you can take steps to avoid it."

Following the IHT changes in the 2024 Autumn Statement, it’ s more important than ever to take steps to mitigate IHT. However, whilst the implication was not apparent to everyone, advisers are now perfectly placed to educate their clients on the expense of doing nothing.

Estate planning is often viewed as a legal process best left to solicitors, but it’ s also a critical element of comprehensive financial advice. When advisers fail to bring up estate planning with their clients, there is a risk of future detriment and harm – both to the client’ s financial wellbeing and to their own business, in the form of reputational, ethical, and even legal consequences. To meet Consumer Duty expectations, and avoid poor outcomes, all avenues should be explored.

Gaps in the financial plan

A financial plan that doesn’ t address estate issues is, by definition, incomplete. Estate planning decisions directly influence tax outcomes, wealth transfer strategies, charitable giving, and even liquidity planning.

When advisers do not address estate considerations such as the tax impact on a beneficiary’ s legacies, ownership structures, or succession plans, they leave major gaps that can derail otherwise sound financial strategies. For example:

• A client’ s retirement accounts might pass sideways to others because beneficiaries weren’ t updated after a divorce.

• A property portfolio may need to be liquidated to pay estate taxes, but probate won’ t be granted until the IHT bill has been paid. To save the executors taking on a costly bridging loan, a life policy in trust provides funds to free-up the estate quickly and prevents having to reduce property prices for a quick sale, thereby helping to maintain the estate’ s value for the beneficiaries.

• A business owner could pass away without an appropriate agreement on the treatment of their shares, creating chaos for remaining shareholders and heirs alike.

Failing to integrate estate planning into the broader financial strategy can threatened to undermine both the quality and credibility of an adviser’ s work.

Jennifer Peaty Director of Compliance Consultancy Simplybiz

4 | The Adviser Online