Concerned about a potential inheritance tax (IHT) liability, our clients sought a solution that would allow them to assist their grandchildren while minimizing their estate’s tax burden.
Objective:
The clients wanted to reduce their estate’s value to avoid a potential £80,000 IHT bill and provide significant financial gifts to their grandchildren to help them buy their first homes.
Obstacle:
The bulk of their estate’s value was tied up in their home. The solution involved using a lifetime mortgage to lower the estate’s value, bringing it below the threshold for IHT.
Outcome:
We secured a £200,000 lifetime mortgage, which the clients used to gift £75,000 to each grandchild, with the remaining £50,000 set aside for home improvements and travel. This approach not only helped their family but also potentially saved £80,000 in IHT.
Summary:
Through strategic use of a lifetime mortgage, the clients were able to reduce their inheritance tax liability, provide meaningful financial support to their grandchildren, and enhance their own retirement lifestyle.