IHT Planning with Retirement Planning

These two subjects are inextricably linked in that a decent retirement plan can enhance an IHT plan.

The value of pension and the income they produce can fall as well as rise. You may get back less than you invested.

Tax treatment varies according to individual circumstances and is subject to change

How it works

These two subjects are inextricably linked in that a decent retirement plan can enhance an IHT plan.

 

Point 1

IHT planning is the allocation of money that you don’t spend during your retirement. The two will always work hand in hand and in recognising this you can only improve your position.

For example, any money that is held in a pension at the time of your death can sidestep your estate and get passed to your beneficiaries without IHT.

Point 2

So, if you happen to have an extra £100,000 of your estate in a pension due to proactive planning, you could save up to £40,000 of IHT.

Of course, due to the pension freedoms act that £100,000 is still accessible, but unless you need it, outside of your estate. For this reason, the earlier you look at IHT planning the better.

Point 3

Please don’t misunderstand, we’re not saying everybody must act now. In many cases waiting until you are older is the right decision.

However, there are clients that benefit from making early moves with their money. Moves that don’t really affect their lives, but that save IHT.

While no IHT will be paid, if the pension holder is over 75 at the time of death the beneficiaries will be liable to income tax on pension benefits drawn. I.e. if no benefits are drawn, no income tax is paid.