Estate and Wealth Planning for 2026

Inheritance Tax planning typically emphasises well-established tools such as trusts and gifts made more than seven years prior to death. However, a range of less commonly utilised strategies can also significantly contribute to the preservation of family wealth.

1. One such approach involves making regular gifts from surplus income. When these payments are genuinely from excess income and do not compromise your standard of living, they are immediately outside your estate, with no upper limit.
2. Homeowners also have opportunities to transfer property more effectively: gifting a share of your home to someone living with you can circumvent the usual “Gift with Reservation of Benefit” rules.
3. While transferring the entire property and paying full market rent to the new owner offers another method to exclude the property from your taxable estate.
4. Additional reliefs can further mitigate the Inheritance Tax (IHT) liability. The Residence Nil Rate Band (RNRB) provides noteworthy protection for homes passing to direct descendants, although it phases out for estates exceeding £2 million.
5. Deeds of Variation offer flexibility after death, enabling beneficiaries to redirect an inheritance within two years to achieve a more tax-efficient outcome.
6. Charitable legacies also serve a strategic purpose: leaving at least 10% of your net chargeable estate to charity reduces the IHT rate on the remaining estate from 40% to 36%, thereby increasing the value of your gift and decreasing the overall tax liability.

Nonetheless, effective estate planning extends beyond understanding technical rules. The most successful strategies are grounded in clear communication, thorough documentation, and professional advice. Complex arrangements whether involving property, surplus income gifting, or post-death variations can easily give rise to misunderstandings if intentions are not openly shared. Ensuring that your estate plan is legally sound, tax-efficient, and aligned with your family’s expectations is essential for facilitating a smooth and responsible transfer of your assets.