I have had a couple of interesting conversations with clients this week about what constitutes ‘fairness’ when distributing an estate.

This is a really subjective issue and one where I am not sure there is a single right or wrong answer.

The main area where this question arises is when distributing an estate between two or more children who may have enjoyed varying degrees of financial success in their own right. It could well be that one child has pursued a more lucrative career path than the other and so now finds themselves in a much more comfortable financial position than the other.

In this case, there are broadly 2 options available to the parents as we consider their estate planning:

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As 2025 gets underway and the mince pies and merriment fall into the rear view mirror, there seems to be a real momentum behind people’s Estate Planning. Don’t get me wrong, we always see a spike in Estate Planning activity at the start of each year as people make new year’s resolutions to ‘finally get around to it’.

2025 feels different – there seems to be a real acknowledgement that this might be the last chance to really make a difference before certain Estate Planning opportunities are curtailed or closed off altogether.

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It doesn’t seem that long ago that we were kicking off 2024 and here we are thinking about Christmas. Although we say the same thing every time, the years really do seem to be going by faster than ever and this is especially relevant for our Estate Planning.

2024 has been a year of huge change in this area. Of course we had the general election a few months back which returned Labour to power after a 14 year hiatus with the largest majority in living memory. Regardless of your overall political affiliations, it is probably fair to say that Labour is fairly hostile when it comes to Inheritance Tax policy.

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I am not sure how to describe the overall feeling in the office on what one colleague has described as ‘Budget Boxing Day’. In my 15 years in this profession, I have never known any financial or political event (Budget, Autumn Statement, Election etc) to cause this much rumour, speculation and in some cases, outright panic!

In one way yesterday was a huge relief – after a seemingly never-ending period between the election and the budget, we finally have some certainly about the future direction of travel for tax policy. Unfortunately, that is where the good news ends really.

Before I get into the detail, I would like to put on record my thanks to the Buckingham Gate team who have worked tirelessly over the past 3 months or so to get planning solutions in place for clients ahead of the budget day – I have never seen such dedication and determination and I am very grateful for all of their efforts!

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With the budget now barely a week away, the rumour mill is in absolute overdrive.

Speculation is rife about what may or may not be in the Chancellor’s red box and it seems that everyone has an opinion. Even my barber this morning wanted to chew the fat on the budget (and he didn’t even know I work in finance).

In recent days, we have heard reports of people taking increasingly extreme action to try to preempt what they think will be announced on the 30th October. This as a strategy is fraught with difficulty.

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We are now getting used to the new Government and while the first few weeks of Keir Starmer’s premiership have not been too dramatic, there has been swift action on some of their key policy objectives already, with some significant measures outlined in the King’s Speech.

What is conspicuous in its absence is any comment on tax policy. While the Labour manifesto was very clear about which taxes they were not going to change, it was almost totally silent on which taxes they are going to change and we assume that they will have to change some.

The papers are this morning reporting that Rachael Reeves will next week provide a ‘state of the nation’ address on the UKs finances and that she will announce (perhaps unsurprisingly) that “it’s worse than we expected”.

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It seemed almost inevitable, however we woke this morning to find that, as widely predicted, Keir Starmer’s Labour party will form the next Government with a huge majority of around 170 seats – the largest Government majority in a very long time and also one of the largest swings in modern political history.

While nothing will be certain at this point, attention will now turn to the likely direction of policy and, as far as we are concerned, any measures that might impact on our Estate Planning work with clients.

While it seems likely at the time of writing that Labour will wait until the Autumn to hold their first budget, there is always the possibility of things happening sooner.

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In what seemed to be a surprise move, Rishi Sunak called a snap summer election which is now little more than 3 weeks away.

Attention will turn next week to the party manifestos which will begin to give us an idea of what the main parties have in store for us in the coming 5 years. A Labour victory looks all but certain at this stage, although as the saying often goes, a week is a long time in politics and so I suppose 4 weeks is an eternity! Things can of course change, however for the moment, let’s consider the likely outcome that we have a changing of the guard at Westminster in 4 weeks’ time.

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The normal expenditure out of income exemption is one of the most effective, yet underused, inheritance tax exemptions. If the taxpayer makes payments (or intends to make payments) on a regular basis out of income, and those payments do not affect the taxpayer’s usual standard of living, those payments will be free of inheritance tax. It should be noted that withdrawals from investment bonds are not treated as income for these purposes, and this extends to payments made to the settlor from a loan trust or discounted gift trust.

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Creating a will is like setting your sat-nav for a smooth journey for your assets after you’re gone. However, just as with any well-planned journey, there are risks of unexpected detours—in this case, a will being contested (usually by a disappointed beneficiary) when you are gone.

Despite meticulous planning, the reality of a will being contested can be more common than many anticipate, and understanding these risks is crucial for anyone thinking about their estate planning.

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