Estate Planning Post-Budget 2024: Key Takeaways for Financial Advisers
The Autumn Budget introduced significant changes impacting estate planning strategies, especially for clients with substantial assets. Here are three critical areas for financial advisers to review with clients:
- Capital Gains Tax Adjustments
The increase in CGT rates and the reduction of business asset disposal relief complicate planning for clients with large investments or business assets. Strategies to offset CGT may include fully utilising the £3,000 spousal allowance, applying losses to cancel gains, and maximising tax-efficient ISAs.
- Inheritance Tax and AIM Reliefs
Reduced AIM reliefs mean clients may need to reconsider these assets as part of IHT planning. While business property relief still applies to combined business and agricultural assets up to £1 million (and partially beyond), advisers might now lean toward direct gifting for more straightforward, often IHT-exempt, estate transfer solutions.
- Pension Inheritance Planning
Starting in 2027, pension pots will become subject to IHT, altering their role in generational wealth transfer. This shift may prompt clients to consider other assets for inheritance while using their pensions to cover personal expenses. Advisers can guide clients in making effective gifting plans, utilising tax allowances, and exploring trust options.
Strategy Recommendations
The recent budget calls for a proactive response from advisers to keep clients informed and prepared.
Consider:
- Client Reviews: Now is an ideal time to revisit client plans, particularly focusing on CGT exposure, AIM assets, and pension inheritance options.
- Gifting and Trust Options: Explore expanded use of trusts and structured gifts as core estate planning tools, especially with changing reliefs.
- Pension Consultations: With pension rules in flux, clients will benefit from guidance on how to balance income needs with wealth transfer goals.
Final Thoughts
Estate planning post-budget is about aligning client objectives with the evolving tax landscape. By staying agile and leveraging tools like trusts, gifting, and comprehensive reviews, advisers can protect clients’ assets effectively while navigating new fiscal challenges. This budget may prompt clients to take more proactive steps in estate planning, with advisers playing a crucial role in shaping informed, strategic decisions.
How Estgro Can Help
Estgro’s platform assesses your client data and equips advisers with the tools to identify estate planning risks and tax-saving opportunities. With comprehensive tools for calculating tax savings based on suggested mitigating strategies, Estgro empowers advisers to offer accurate, proactive, and up-to-date advice. Partner with Estgro to optimise client outcomes, ensuring their estate plans adapt seamlessly to the latest regulatory changes and continue to protect family wealth for future generations.