Estate Planning and COVID-19: How to Use the Situation to Your Advantage

Aside from the opportunity to spend more time with family at home, and not having to commute, there are few positives that have come about following the COVID-19 pandemic. However, in terms of estate planning, there could potentially be a number of ways in which the situation could be used to your advantage, in particular around how you own your assets.

Transferring assets into a trust

It may be a good time to transfer assets into a trust where the Capital Gains Tax liability can be held over. For assets that have reduced in value, it could be pertinent to make a gift to the trust up to the nil rate band threshold.

There should be no immediate Inheritance Tax liability, providing you survive seven years from the date of the gift. The outcome of the exercise will see you having removed the asset from your estate, so reducing the Inheritance Tax payable by your beneficiaries.

Gifting assets

One strategy that can be useful as an inheritance tax planning tool is lifetime gifting of assets.

Normally, when you are looking at this strategy, you will need to take into consideration the potential for a Capital Gains Tax liability, which can sometimes make the gift inefficient. However, with the current economic impact cause by the pandemic, now may be a better time to consider gifting assets that do not quality for Inheritance Tax relief. Whether it is property or investments, or anything that is currently making a loss, you may find that the Capital Gains Tax liability is lower than it would normally be.

Business succession planning

If the economic impact of the pandemic has resulted in a dip in the value of your family business shares, then it could be a good time to consider succession planning, by passing on shares to other family members.

Estate administration

There are various potential opportunities in terms of estates that are currently under administration. Tax relief may for example be available where certain assets have been sold at a value less than that which was submitted for probate. Relief can potentially also be claimed on qualifying investments which are unit trusts, listed stocks and shares or interest in land. Where investments currently stand at a loss, it may be possible to crystallise the loss and mitigate the loss in value by making a saving on Inheritance Tax.

However you decide to capitalise on the opportunities presented by the impact of coronavirus, one thing you must do is take professional, independent estate planning advice. It is vital that you are well-informed before you make any decisions, so as to ensure you achieve results that are in yours and your family’s best interests.

Estate planning expertise you can trust, from Partridge Muir & Warren

Here are Partridge Muir & Warren we have at your disposal our own in-house team of legal experts, financial planners and tax advisers, all on hand to provide you with the comprehensive advice you need to ensure your family is well provided for, and your assets are protected, whatever the economic situation.

To learn more about how we can assist you with all your estate planning needs, please get in touch.