If I die, will the taxman benefit at the expense of my family?

James owns and manages his business. At 38, he is totally committed to the job, and his spare time is prioritised for his family.

For James there are just not enough hours in the day to achieve everything he wants. However, he is becoming increasingly concerned that if anything did happen to him the taxman would benefit at the expense of his loved ones. He approached us just to “sort it all out!”

How we could help

Talking things through it was apparent that the main priority for James was ensuring that if he died in the next 10 years his wife and children would have sufficient money to carry on living in their existing house, without the need for the children to change schools. We prepared a detailed cashflow to assess the sum of money that would be needed to ensure they could.

As one of our key roles is minimising any tax payable, we were then able to consider tax efficiency alongside the capital sum required. In our experience the way people’s affairs have evolved over time, which includes wills, pensions, insurance policies, trusts etc., do not always produce the expected results.

So we conducted a "simulated death" exercise. This took a holistic view of James’s affairs and we produced a report that illustrated the position if either he or his wife died, or if they both died together in an accident, including:

  • The inheritance tax payable by the estates and how this might be funded
  • The split of capital and income produced between the chosen beneficiaries
  • The tax effect on pension funds and proceeds from life assurance policies

This enabled him to assess with our help whether his dependants would be adequately provided for if he died.

The outcome

We established they needed to:

  • Change their wills to minimise inheritance tax and protect the family’s wealth
  • Rearrange James’s pension policies to maximise their tax efficiency
  • Take out additional life cover to bridge the gap between the potential inheritance tax liability and the liquid assets in their portfolio

James now focuses all his considerable energies on his work and family priorities. He knows that when he dies it will be his loved ones, not the taxman that will benefit from all his hard work.