He adds that as with all government giveaways, the devil is in the detail.
“Most importantly, if the total estate of the deceased is worth more than £2m, the extra RNRB will be eroded away – back to zero, if the estate is big enough,” Mr Roxborough points out.
“Secondly, the beneficiary must be a direct descendent of the deceased – so nieces and nephews, for example, will not be able to benefit.
“This is the tip of the iceberg. If clients can benefit from the full £1m allowance, this will be a huge windfall for their beneficiaries, so we continually try to arrange assets for our clients to meet the criteria needed where possible.”
Clients may also have questions about what happens to pensions when it comes to end of life planning.
Given that pension pots could be fairly sizeable by the time a relative passes away, clients will want to know what can and cannot be passed on, and what the taxman is owed.
Fiona Tait, technical director at Intelligent Pensions, explains: “One thing to remember is that any benefits held within a pension plan at the time of death do not form part of an individual’s estate and can usually be passed on free of IHT.
“People with personal pensions, or other defined contribution (DC) arrangements, have the freedom to nominate anyone that they choose to receive the balance of their fund on death, while spouses and dependents of those in final salary schemes will receive benefits in line with the scheme rules.”
So far, this all sounds fairly straightforward.
How does this work in practice then?
As Ms Tait sets out: “What this means is that older people who are lucky enough to have sufficient pension and non-pension assets should consider drawing down the latter to meet expenses, rather than the pension fund so that they can pass on as much as possible without attracting IHT.”
She suggest those with DC pensions should give serious consideration to who they want to nominate to receive the pension fund on their death.
“Most people will automatically nominate their spouse,” she acknowledges. “However, the spouse will receive the rest of the estate without paying IHT and so it could make sense to pass on these benefits to someone, such as an adult child or other relative, who would not be exempt from IHT.”
The burning question for most clients is how can they mitigate the impact of inheritance tax on their estate.
