There are two ways of thinking about wealth. One asks: how do I protect it from the reach of the state while I am alive? The other asks: what happens to it when I am no longer here? Most of our clients come to us with the first question and stay because of the second. Because the uncomfortable truth is this: succession rarely fails because of the will. It almost always fails because assets have to be sold at the wrong moment, because the tax falls due in cash, because several heirs cannot agree, or because a business, a property or a holding of metal cannot be divided into fair pieces.
This page shows you where the real fault lines of estate planning lie, why the claims of family members reach further than most people think, and which structures can bring order to both, without you handing over control of your life's work before you want to.
The typical course of events when nothing is prepared
A case that happens somewhere in the UK every week. A father dies and leaves a block of flats worth two million pounds, plus some savings. His two children inherit in equal shares, as the will says, and on paper everything is settled.
Then reality arrives. The two now own the building together: neither can decide alone, and either can take the other to court. HMRC assesses the inheritance tax, and it wants money, not bricks. The threshold of £325,000 is quickly used up at these values, and the standard rate on everything above it is 40 per cent, payable out of an estate that consists almost entirely of a single indivisible building. Paying in instalments helps only so far: tax on land and buildings can be spread over ten years in equal annual instalments, as long as the property is not sold, but interest is usually charged on the outstanding balance. The bill does not get smaller, it only gets longer.
The daughter wants to keep the building, the son wants money. Because the two cannot agree, the son goes to court under the Trusts of Land and Appointment of Trustees Act 1996, and the dispute ends in a court-ordered sale. A forced sale means selling to a deadline, not for the best price. The life's work of a generation becomes proceeds below market value, divided by two, less tax and legal costs. Nobody made a mistake here. It is just that nobody set the order of things while it was still possible.
Why inheritance tax becomes the trigger
We will not tell you how high inheritance tax will be in ten years. Nobody knows, and anyone who claims to is selling you a forecast as a fact. The reason to act now lies in the law as it stands, and that is entirely sufficient: the standard rate today is already 40 per cent on everything above the threshold. The threshold of £325,000, rising to as much as £500,000 when the home goes to children or grandchildren, is a fixed amount in the law, while asset values, property above all, have grown over the years. More and more perfectly ordinary family estates grow into a tax that was once meant for large fortunes. And anyone who follows the political debate can see the direction of the proposals. You need predict nothing more to understand: the conditions for an orderly transfer do not improve the longer you wait. What can be arranged today can be arranged today.
The rules on gifts make the point sharper. A gift is normally free of inheritance tax if you live for another seven years; if you die sooner, it can be taxed, with taper relief reducing the charge the longer ago the gift was made. And the clock does not run at all if you keep the benefit: give away your house but go on living in it, and it counts as a gift with reservation and is added back to your estate when you die, unless you pay the new owner a market rent and your share of the bills. Whoever gives away and keeps using has, for tax purposes, given away nothing.
Succession and asset protection ask the same question
At first sight these are two subjects: here, warding off the reach of the state; there, the orderly handover to the next generation. In fact both ask the same question: who controls the wealth, who has the benefit of it, and can the two roles be separated?
As long as control and benefit lie undivided with a single individual, the wealth is as vulnerable as it can be: during your lifetime to creditors and levies, on death to tax, family claims and disputes among heirs. Every serious arrangement, from a holding structure to a foundation, works on exactly this separation. That is why the structures that protect your wealth during your lifetime are the same ones that can carry your succession. Plan the two separately and you build twice and pay twice.
Family claims: the limit almost every plan underestimates
No subject affects clients as emotionally as this one. The child with whom contact has broken off. The spouse from an earlier marriage. The idea that someone will share in the estate with whom you wanted nothing more to do during your lifetime. And hardly anywhere do so many half-truths circulate.
So the honest finding first. England and Wales have no fixed forced share, but freedom of testamentary disposition has a limit. Under the Inheritance (Provision for Family and Dependants) Act 1975, a spouse or civil partner, a former spouse who has not remarried, a partner who lived with the deceased as a couple for the two years before death, a child, a person treated as a child of the family and anyone the deceased was maintaining can ask the court for reasonable financial provision from the estate, on the ground that the will or the intestacy rules do not provide it. The court decides, not the will. Scotland goes further: a surviving spouse or civil partner and the children have fixed legal rights to a share of the moveable estate, money, savings and investments included, whatever the will says; where there are both, the spouse can claim one third and the children a further third between them.
The second part of the finding is the one most people do not know: giving assets away shortly before death does not end the matter. If someone made a gift less than six years before death with the intention of defeating a claim under the 1975 Act, the court can order the person who received it to provide money or property for the claimant, even if that person no longer holds what was given. A structure abroad changes little here: the Act turns on whether the deceased died domiciled in England and Wales, not on where the assets were sent.
The consequence is uncomfortable and for that very reason the most important sentence on this page: whoever arranges things at the last minute arranges them in vain. Family claims and the gift rules are the strongest reasons to begin estate planning early, not late. Seven years and six years are long periods, but only for those who start them in time and make no mistakes in starting them.
The foundation solutions: for the generation after next
Where the issue is no longer a single property but an entire fortune that is meant to stay together over generations, the route leads to the foundation. A foundation does not die, it knows no co-heirs who can force a sale, and it distributes according to the rules you have laid down, not according to the accident of family circumstances. The only question is which foundation, and the answer hinges on a single point: control.
The Liechtenstein family foundation is the solution for someone who can genuinely give up control. It combines the order of succession with a stable legal system of its own outside the EU. Why everything depends on this renunciation of control, what it means in practice and where its limits lie, we have written up on a page of its own: asset protection in Liechtenstein.
Two instruments deliberately belong at the edge of this list: the trust and the Family Investment Company are structures for people who leave. They only come into question once a move abroad is actually on the cards, and then they belong in the planning of the move, not in the estate planning of someone who stays. For everyone who remains tax-resident at home, the foundation-style Limited (Company Limited by Guarantee), the Wyoming structures, such as the Wyoming LLC, and accounts outside the EU are the right tools.
The uncomfortable cases nobody wants to think about
An estate plan is only finished when it also holds up in the situations you would rather not imagine.
- Several heirs, one indivisible asset. Joint ownership among heirs is the worst form in which wealth can be held: unable to act when there is a dispute, and any co-owner can take the matter to court and push for a sale. Anyone with more than one heir needs an arrangement that keeps the wealth together and still treats the heirs fairly. No standard clause in a will achieves that.
- An heir abroad. If one of your children lives in the USA, in Switzerland or in Dubai, two tax and legal systems meet on your death. Which one reaches in, what has to be reported and where the tax is ultimately paid must be clarified beforehand, not afterwards.
- Divorce in the next generation. You do not just leave assets to your child, you leave them into your child's life. What becomes of your daughter's share if her marriage fails is decided by how the transfer was arranged, not by what you wished for.
- Assets abroad with no route in for those left behind. The gold vault in Zurich, the account in Singapore, the structure in Panama: all set up correctly, but who gets access if you are no longer here tomorrow? Vault operators and banks release assets only against the evidence their own law requires, and that can take time if nothing has been prepared. What heirs of assets abroad need in practice we have worked through using precious metals as the example: precious metals in an estate.
What we do
We do not write your will; your solicitor does that. We set the order of things with you, so that in the end the will only confirms what has long been settled in the structure: which parts of your wealth belong in which structure, what is transferred during your lifetime and what is not, how family claims are planned for instead of pushed aside, and how your heirs can actually reach what you have built for them when the time comes.
The first step is a review: what is there, where is it, who should receive it, and what would happen today if death occurred tomorrow? On that basis we decide together which building blocks you need, and in which order. A consultation is the right place to start.
Frequently asked questions
Can I exclude my children with a foundation?
Not simply. In England and Wales a child can ask the court for reasonable financial provision from the estate under the 1975 Act, and gifts made less than six years before death with the intention of defeating such a claim can be reached through the person who received them. In Scotland children have a fixed legal right to part of the moveable estate. What an early, cleanly arranged transfer can achieve is a gradual reduction of the area open to attack, and time is the most important factor in that.
How much inheritance tax is actually due?
The standard rate is 40 per cent on the part of the estate above the threshold of £325,000. Leaving your home to your children or grandchildren can raise the threshold to £500,000, and everything left to a spouse or civil partner is generally free of the tax. What often matters more than the rate is liquidity: the tax is due in money, even if the estate consists of a property.
Can HMRC not simply let us pay later?
Only within limits. Tax on land and buildings, on certain shareholdings and on business assets can be paid in equal annual instalments over ten years, as long as the property is not sold, and interest is usually charged on the outstanding balance. A plan that rests on paying later is not a plan.
Can I give my house to my children and keep living in it?
Not without consequences. If you keep living in a home you have given away, it counts as a gift with reservation and is added to the value of your estate when you die, unless you pay rent to the new owner at the going rate and your share of the bills. If you move out and live for another seven years, there is normally no inheritance tax to pay on it.
What about a trust or a Family Investment Company for succession?
Both are structures for people who leave. They only come into question once a move abroad is actually on the cards, and are then built into the planning of the move. For the estate planning of clients who remain tax-resident at home we rely on the foundation-style Limited (Company Limited by Guarantee), the Wyoming structures, accounts outside the EU and, where giving up control is bearable, the Liechtenstein family foundation.
At what age should you start estate planning?
It is not age that decides, but the time limits. The most important one runs for seven years, and it only starts with an effective gift from which you keep no benefit. Start at 55 and you have the full effect at 62. Start at 75 and you leave a half-finished piece of work. The right moment is therefore almost always now, to the extent of the steps that make sense today.