Client Wanted to Put Their House Into Trust to Avoid Inheritance Tax

A gentleman in his late 60s contacted Soteria Estate Planning after receiving advice from friends about Inheritance Tax planning. Having heard that placing his home into a trust would allow his family to avoid Inheritance Tax, he was keen to put arrangements in place as quickly as possible.

Like many people, the client had spent time researching online and speaking to friends who believed a trust could provide a simple solution to reducing his family's future tax liability. However, he wanted professional advice before making any decisions.

During our consultation, we took the time to understand the client's circumstances, assets, family situation, and long-term objectives. Whilst his primary goal was to minimise the potential impact of Inheritance Tax, it quickly became apparent that the solution he had in mind would not achieve the outcome he was expecting.

We explained that simply placing a property into trust whilst continuing to live in it does not automatically remove the value of the property from an individual's estate for Inheritance Tax purposes. In many situations, the property remains part of the estate when calculating any future Inheritance Tax liability.

Although the client was initially surprised by this, he appreciated the clarity and honesty of the advice. Rather than implementing a structure that would provide little or no tax benefit, we explored alternative planning options and discussed the circumstances where trusts can be highly effective when used appropriately.

By the end of the meeting, the client had a much clearer understanding of how trusts work, the limitations of certain arrangements, and the importance of receiving professional advice before making significant estate planning decisions.

Most importantly, he avoided putting costly arrangements in place that would not have achieved his objectives.

This planning story highlights the importance of seeking specialist advice when considering trusts and Inheritance Tax planning. Whilst trusts can be incredibly effective in the right circumstances, they are not a one-size-fits-all solution, and the best outcome is achieved when planning is tailored to an individual's specific needs and goals.

Have questions about Trusts, Inheritance Tax planning, or protecting your family's future? Contact the team at Soteria Estate Planning. Call us on 01344 531521 or arrange a meeting with one of our advisers today.