Addressing tax on high value estates

Wellers Wealth, are specialist private wealth solicitors, offering private clients smart tax led solutions, with a wealth of experience acting for executors and trustees of very large estates, and trusts, owners of corporate, beneficiaries and settlors of offshore trusts.

Probate and Administration of Estates 

Wellers wealth have extensive experience dealing with large estates involving high net worth UK estates and international estates with UK interests. We can advise on Inheritance Tax planning, retrospectively, via the use of deeds of variation and ensure that all tax reliefs are maximised. Where relevant, deeds of variation can be used to set up trusts retrospectively back to the date of death and the Inheritance Tax burden can be improved.

Inheritance Tax Planning 

We advise on Inheritance Tax, including domicile status and double tax issues; chargeable transfers, from an Inheritance Tax perspective, both during lifetime and on death; and the grossing up and double grossing up, where applicable, of legacies in a Will, to calculate where the burden of Inheritance Tax falls, where there are both tax free and tax bearing legacies or where the residue of the estate is partially exempt. For example, where a will leaves a tax-free legacy (or a combination of tax-free legacies) and a wholly exempt residue, we calculate the inheritance tax on a grossed up basis. Where there are one or more tax free legacies in a Will and a partly exempt/partly taxable residue, or where there are a mix of tax free and tax bearing legacies and the residue is either wholly or partly exempt, double grossing up applies.

 The above becomes more complex where there is an agricultural property relief or business property relief and the IHT spreading provisions apply. The spreading provisions apply where there are one or more specific gifts of non-agricultural or non-business property, i.e. they do not qualify for agricultural property or business property relief, such as cash, quoted shares or private residences and the residue contains property qualifying for business or agricultural property relief. Unless there is careful consideration of these issues at the point wills are drafted or deeds of variation within two years of death are considered, valuable tax exemptions can be wasted and tax paid unnecessarily.

Transfer of value by a close company are often overlooked and the inheritance tax implications not considered if you are a shareholder of a close company (defined as a UK company or non UK company controlled by either 5 or fewer participators (shareholders) or any number of shareholders who are directors). When a close company makes a transfer of value that transfer is apportioned to each shareholder or participator in accordance with their rights and interest immediately prior to the transfer for the purpose of charging Inheritance Tax. A transfer of value by a close company is specifically prevented from being a PET (potentially exempt transfer) which falls outside of the donors estates after seven years for inheritance tax purposes and becomes immediately chargeable to lifetime Inheritance Tax. These provisions may become applicable where for example land is sold to a friend at an undervalue, or there is an alteration of share capital.

We are happy to advise on gifts of business property and agricultural property to ensure the reliefs are maximised. These can be either lifetime gifts or gifts on death.

Where assets are given away and the donor does not survive seven years, the assets are then deemed to fall into the estate for inheritance tax purposes. Where there has been a fall in value of the asset, we can make a claim in behalf of the donee to reduce the death tax on the lifetime gift. We can also advise on restrictions on deduction of debts, the inheritance tax valuation rules, quick succession relief, post-mortem relief, deeds of variation, Inheritance Tax on UK residential property and enveloped properties, heritage property and tax planning including use of freezer shares and trusts.

UK Trusts 

Wellers Wealth can advise on Income Tax on interest in possession trusts and discretionary trusts; Income Tax on mixed trusts; exit charges on relevant property trusts; principal charges; additions to relevant property trusts and the tax effect; excluded property trusts; protected trusts; accumulation and maintenance trusts and the Inheritance Tax effect; other trusts for children;  trusts for vulnerable beneficiaries and disabled persons and their tax treatment; tax treatment of annuities; Capital Gains Tax on UK trusts; UK trust income taxed on the settlor;  businesses and settlements; Capital Gains Tax and inheritance tax implications of settlor interested trusts; tax treatment of bare trusts and the taxation of estates.

Offshore Trusts 

Wellers Wealth can advise on UK Capital Gains Tax, Inheritance Tax and Income Tax issues for offshore trusts in respect of the trust, the settlor and the beneficiaries.

If you have any questions about any of the above, please contact us on 020 7481 2422 or by email at wellers.wealth@wellerslawgroup.com