how we helped our clients

Here are some case studies that illustrate the best examples of what we have achieved for our clients:

Estates

We advised Executors on the nature and benefits of the death on active service exemption for inheritance tax purposes. During the Second World War a brigadier was pinned down in an open dug-out in Burma for three or four days by Japanese fire. He suffered severe sunburn. That turned into skin cancer and a war pension was awarded. About six months before he died he had a major skin cancer operation on his head. Following our advice and representations we made to the doctor, skin cancer was admitted as a secondary cause of death on the death certificate.

If the cause of death is either directly as a result of either the wound or disease inflicted or contracted during service or if the deceased died of a disease contracted at some previous time but the death was due to or hastened by the aggravation of the disease during service there is no charge to Inheritance tax on the estate

The estate in this case is about £1.5 million so the inheritance tax saving will be about £500,000.

Lifetime Planning

When advising clients in connection with tax efficient wills we recommend that they should revise a share-holders’ agreement so as to preserve £200,000 of inheritance tax business property relief which would otherwise be available in connection with their company share holdings.

Trusts

An existing client based in London, contacted us to tell us that she was a residuary legatee under the will of her late aunt. The bad news was that there was little in the residue because the aunt had left her home worth just under £800,000 to another relative who had spent the last three or four years looking after the aunt. The inheritance tax due in respect of the house was payable from the residue which would otherwise have passed to our client.

We used a constructive trust argument to take the value of the house out of the aunt’s estate for inheritance tax purposes.

Fundamentally, the constructive trust argument works on the basis that the relative who inherited the house put himself out and suffered a financial loss by honouring an obligation to look after his aunt in exchange for a promise that he would be given the house. The net result is that the majority of the value of the house was treated as held within a constructive trust for the benefit of the relative not the aunt. This argument saved IHT of 40% on £800,000 i.e. £320,000. Our client receives the benefit of that saving.

Agricultural Wills, Probate and Tax

Our expereince includes dealing with a farmer’s estate, whereby agricultural property has been re-directed by a deed of variation to a discretionary trust; and residuary cash to the widow, who will have the ability to purchase the agricultural property from the trust; thereby potentially obtaining 100% agricultural relief for the family a second time with a consequent inheritance tax saving of about £250,000 sterling.

We regularly use nil rate discretionary trusts on first death, with property ownership as tenants in common and use of loan powers to enable the surviving spouse to occupy the property, but saving inheritance tax on his/her death.

Another example is our successful management of a seven figure estate with substantial tax free legacies and most of the residue tied up in trust for non-exempt beneficiaries. However, with the skilful use of a deed of variation supported by appropriate life cover this will save over £400,000 sterling inheritance tax.