The will bank opportunity

Regularly reviewing your firm’s will bank greatly enhances the service provided to your clients whilst providing a source of recurrent income.

On a personal level, clients may have many reasons to amend their wills. Beneficiaries, executors or trustees may be added or removed due to births, deaths, marriages, divorces or myriad of other changes in circumstances.... the possibilities are endless! However, once made, wills are often forgotten and so a timely prompt from a legal adviser can be invaluable.

From a taxation perspective regular reviews also enhance planning by responding to legislative changes – clients may remove a redundant nil rate band trust (or debate its merits), or perhaps make or increase charitable bequests to reduce tax to 36%. The main residence nil rate band offers further opportunities.

However sublimely a will is worded, when it is invoked most planning opportunities have been lost. Encouraging clients to prepare a “draft inventory” alongside the will helps identify any early steps that could reduce the potential inheritance tax burden.

Working closely with an experienced financial adviser, solicitors can help their clients mitigate estate taxes inter vivos. This may involve making gifts and there are valuable concessions where funds leave the estate immediately – the small gifts exemption, annual gifting exemption, gifts on marriage and gifts from income in excess of normal expenditure. The latter can fund life cover to meet a future inheritance tax liability, or fund Junior ISAs, New Lifetime ISAs and even pension plans for grandchildren!

For larger sums, a trust may be suitable. Many clients baulk at making large lifetime gifts, but some structures reserve a high degree of access:

• loan trust;
• carve out (e.g. discounted gift) trust;
• flexible reversionary trust.

However, substantial gifts take seven years to leave the estate, which is a concern for older clients. An investment that receives business property relief may also be attractive – it is free of tax after just two years, although tolerance of investment risk is critical and again expert financial advice can offer valuable guidance. The use of a family investment company also offers creative taxation possibilities.

Through early planning opportunities such as these, solicitors and financial advisers can create and develop regular will review systems to help clients maximise their assets for their intended beneficiaries.