that a Gift of Hindsight can reduce your Inheritance Tax?

Yes it’s true a McClure Gift of Hindsight can reduce your Inheritance Tax.


Say a parent dies and leaves the estate to the children.  One or more of the children are already over their allowance for IHT.  Or will be by the time they die. 
Or might be by then.  When the child dies the inheritance from the parent is part of their estate for IHT and everything over their allowance (normally £325,000) will suffer IHT at 40%.


However if the clients use a McClure Gift of Hindsight, we can change the parents’ Will.  We can even prepare a Will for the parent if there wasn’t one in the first place.  The child’s share can then be protected in a Will Trust.  In practice the child won’t notice the difference but they will avoid the IHT. 


Here’s an example.  Say a widow dies and leaves £600,000 between 2 children, a son and a daughter.  The son is unlikely to have an IHT liability so he doesn’t need to do anything.  However the daughter is already over her allowance and if she inherits the £300,000 directly when she dies this can cost her family £120,000 in IHT.  We use our Gift of Hindsight to change the mother’s Will to protect that half in a Will Trust for the benefit of the daughter and her family.  She can even receive the £300,000 and keep the protection of the Trust.


So with no Gift of Hindsight she stands to lose £120,000 but with a Gift of Hindsight she stands to save £120,000.


For unmarried couples it is even more important when one dies.  If everything goes to the survivor, the survivor only has one Nil Rate Band Allowance which is currently £325,000.  With a McClure Gift of Hindsight we can change the deceased’s Will – or even prepare one if there wasn’t one there already – to protect the deceased’s half in a Will Trust. 


For example, if an unmarried couple have a total estate of £600,000.  One dies and everything goes to the survivor.  When the survivor dies he or she only has a £325,000 allowance which means that £275,000 is liable to IHT at 40% and the bill is over £100,000. 


On the other hand if we use the Gift of Hindsight then the first one’s £300,000 can go into a Will Trust and be exempt from IHT.  When the survivor dies he or she only has £300,000 liable to IHT and that also would be exempt from IHT. 


So you can see that a McClure Gift of Hindsight is a wonderful tool but our experience is that it is very seldom used.  Time limits apply so it’s wise not to delay.


If you think this might affect you or your family then simply contact us on 0800 852 1999 or  to arrange a free no obligation chat with one of our Estate Planning Consultants. 


Home visits are available.