Case study: spend and gift money to keep the value of your estate under the inheritance tax threshold

Mr and Mrs G wanted to leave enough money to be just under the inheritance tax threshold of £650,000, assuming they live to age 100. We calculated that, over the next 14 years (bringing them to age 85), they would need to spend or gift approximately £30,000 extra each year. They had to be very careful what they spent their money on so as not to increase the value of their estate. The obvious choice was holidays. Unfortunately, Mrs G was scared of flying so they were quite limited in the places they could visit. We suggested that she went on a flying phobia course which she did. This worked so well that within six weeks they were on a flight to Borneo to fulfil one of Mr G’s lifelong ambitions to see the orangutans. The following month they were in Barcelona with friends. Not your typical estate planning dull, boring or depressing image! In addition to catching up on holidays, they also decided to gift £10,000 each year to their daughter, on the condition it was used to repay their mortgage. Their son in law had been in and out of work and their mortgage was a struggle to pay. Now, the mortgage is projected to be repaid in five years, instead of 16!

“David has helped change our mind about our finances. It was very difficult to change a lifetime’s mind-set of accumulating money and David has spent a lot of time with us to change our habits by giving us the confidence to spend and gift money. He continually thinks outside the box and encourages us to go on as many holidays whilst we still can. It’s also nice to think that the government is effectively contributing 40 per cent towards the cost! David is always available to speak to if we have any concerns.”