Inheritance Tax
Ward Goodman Case Studies
Inheritance Tax
Reducing Tax Liability
Our client success story illustrates how tailored wealth strategies, incorporating tax planning, asset management, and collaboration with industry specialists, enabled one client to successfully reduce potential tax exposure while laying the groundwork for future family financial security.
One of our clients, sole shareholder of a commercial property investment company valued at approximately £735,000. Alongside their partner owns a family home worth £1,850,000 and holds additional joint savings and investments totalling around £200,000. Our client also has a SIPP (Self-Invested Personal Pension) valued at £120,000.
With a focus on passing down wealth to future generations, Our client sought guidance to reduce the estate’s potential inheritance tax (IHT) liability. Their primary goals included:
- Preserving family wealth for future generations.
- Expanding commercial property holdings.
- Reducing potential IHT exposure, which exceeded £851,000, exacerbated by the loss of Residential Nil-Rate Bands (RNRBs)
Ward Goodman's Solution
Our approach was multi-faceted, aimed at minimising the potential tax burden while allowing our client to maintain control of their assets. Here’s a breakdown of the solution and its key components:
- Gifted 50% of their company shares to their partner, diversifying ownership and starting the process of shifting some assets outside of the estate.
- Our Financial Service team confirmed that they could continue corporate pension contributions. A substantial pension contribution was made, effectively reducing the company’s value and, consequently, their estate’s tax liability.
- The client established a discretionary trust and transferred their company shares into it. This allowed them to retain control over the company while accumulating value outside their estate. The trust structure also enabled them to benefit future generations while mitigating the estate’s IHT exposure.
- By leveraging their pension, the family could continue expanding their property portfolio. This strategy aligned with their goal of acquiring additional commercial properties, diversifying assets and revenue streams without increasing taxable estate value.
- To ensure all legal elements of the trust and property acquisition were handled optimally, we involved one of our strategic partners. This collaborative approach ensured that all aspects of the trust and estate were structured in line with tax regulations.
Impact and Outcome:
- Substantial IHT Savings: With an estimated £434,000 saved in potential IHT, Our clients estate preserved more wealth for his family.
- Increased Control and Flexibility: Through the discretionary trust, Our client and his family retained control of the company, allowing them to continue managing their investments.
- Potential for Further Property Acquisition: The corporate pension enabled continued property purchases, supporting our clients to expand his portfolio.
- Ongoing WG Income: By structuring the trust and estate effectively, the WG team created an ongoing income stream that could support our clients retirement and future planning needs.
Our clients story highlights how proactive, innovative financial planning and a well-rounded business advisory services can help individuals protect their wealth and legacy for future generations. This case exemplifies the power of a flexible, collaborative approach, combining expertise in tax, retirement planning, and asset management to achieve transformative results.
Whether you’re considering generational wealth transfer or exploring ways to reduce potential tax burdens, tailored solutions and the right partnerships can help secure a prosperous future, why not take the first steps and get in touch so we can help your achieve your goals.
Client Case Studies
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