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Clients to talk to about estate planning

There are various estate planning options available, including investments that qualify for Business Property Relief (BPR). We’ve identified ten client scenarios where BPR could complement other estate planning strategies and add value to clients.

BPR risks to keep in mind

You should remember that the value of a BPR-qualifying investment, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest. Tax treatment depends on individual circumstances and legislation could change in the future. Tax reliefs depend on portfolio companies maintaining their BPR-qualifying status. For more detail, see our guide to risks.

1. Clients who don’t want to give away wealth during their lifetime

Investors retain access to 100% of their BPR-qualifying investment. It stays in their name and they can request their money back if needed (subject to liquidity being available).

2. Clients who need to pay care fees

Clients who need to access their capital could use a BPR-qualifying investment to set up regular withdrawals in order to pay the cost of care home fees (subject to liquidity being available).

3. Clients who have left estate planning too late

Investments in BPR-qualifying shares should be exempt from inheritance tax after just two years, provided they are still held at the time of the investor’s death.

4. Clients who want to control how their assets are passed on to future generations

Where a client settles assets in excess of their nil-rate band into a discretionary trust, a lifetime transfer charge of 20% is immediately due. However, if a client has held their BPR-qualifying investment for at least two years, they can settle it into trust without incurring any such charge.

5. Clients with large ISA portfolios

Transferring ISAs into an ISA that is invested in BPR-qualifying shares enables inheritance tax exemption on the ISA after two years.

6. Clients who are selling or have recently sold a business

Clients disposing of a BPR-qualifying business can reinvest some or all of the proceeds into new BPR-qualifying shares within three years and benefit from immediate relief from inheritance tax on their new investment.

7. Clients with a power of attorney in place

BPR-qualifying investments may be a suitable investment where gifts or trust transfers are restricted or prohibited under Court of Protection rules.

8. Clients with a loan trust in place

Any growth in the value of trust property will be immediately outside of the settler’s estate and is therefore free from inheritance tax. However, the initial loan capital is not. If the initial loan is repaid and invested in BPR-qualifying shares, then after two years, this amount would become free of inheritance tax as well.

9. Clients with an Immediate Post Death Interest (IPDI) trust

The property from an IPDI trust will form part of the estate of the life tenant when they pass away, often leaving them little or no inheritance tax nil-rate band for their own estate. If the trust invests in BPR-qualifying shares, the investment will be exempt from inheritance tax after two years. This means the nil-rate band can be used against other assets in the life tenant’s estate.

10. Clients looking to qualify for a Tier 1 (Investor) visa

BPR-qualifying shares are likely to be qualifying investments for the purpose of obtaining a Tier 1 (Investor) visa.

Related documents

Clients who could benefit from investments that qualify for BPR

Download the PDF
 

Find out more

Visit our estate planning hub for more information on identifying clients who could benefit from a conversation about estate planning.

Visit the estate planning hub

 

Business Property Relief

Want to find out more about BPR and how it could help your clients?
Visit our BPR page

 

Talk to us about estate planning

Whatever your enquiry, our dedicated team of Business Development Managers can help.

Find your local BDM

 

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Personal opinions may change and should not be seen as advice or a recommendation.

Nothing on this page constitutes investment, tax or legal advice. Any recommendation should be based on a holistic review of your client’s financial situation, objectives and needs. Before deciding to invest, your clients must understand all the risks and read all product literature carefully.