• March 29, 2024
 Are your middle-income clients getting quietly pushed into higher death duty brackets?

Are your middle-income clients getting quietly pushed into higher death duty brackets?

According to several think tanks, thousands of middle-income families are now heading towards the 40pc bracket for inheritance tax (IHT). This is partly due to rising property prices, but is also due to the five year freeze in tax allowances announced in the spring.  

Whilst more middle income earners find themselves with higher value assets and bigger pots of savings, the IHT allowance will remain steady at £325,000 for the next five years. Quietly pushing unsuspecting clients above the tax-free threshold. In fact, the Office for Budget Responsibility predicts the number of additional people reaching this threshold will number more than 41,000 per year by 2026.

For example, Zoopla reports that the average house price for a detached property in the South East is now £625,000 and with wages rising and inflation set to increase, more middle income earners could indeed find themselves subject to IHT.

The main residence nil-rate band is also set to stay at £175,000 and applies to anyone passing their family home to a direct descendent. This tax was introduced in order to protect middle-income earners from paying an inheritance tax originally aimed at higher earners. However, the average house price across the whole of the UK now stands at £325,384 according to Zoopla.

So, what can you do to help our clients navigate this challenge?

Arken.legal’s industry leading Will drafting software enables practitioners to effect highly nuanced estate planning to help ensure that estates are left in the most tax efficient way possible. For example, it is possible to quickly and simply:

  • Put trusts into a Will to prevent property becoming part of the estate of a spouse (or other beneficiary) on the death of the testator and thus would not add assets to the estate of the beneficiary, thereby potentially pushing them over the IHT threshold;
  • Split out the RNRB to protect it for direct lineal descendants while putting the remainder of the estate into a trust;
  • Create flexible life interest trusts which allow for a life interest (terminating in a discretionary trust) over the course of which capital and income can be divested to the life tenant and the discretionary beneficiary, thereby reducing the size of the asset over the course of the life interest.

Other things to consider in relation to estates approaching the IHT threshhold:

  • Set up a scheme of lifetime gifting to reduce the size of the estate on death. Such gifts will be potentially exempt from IHT until the testator has survived the gift by 7 years – if they die within the seven years, the gift becomes a failed potentially exempt transfer and IHT (on a reducing scale) will be chargeable. This risk of death within the 7 years (and hence the potential IHT liability) can, however, be insured against.
  • Transfer assets into a trust so that they do not form part of the death estate – a range of lifetime  trusts can be quickly and easily created in Arken Lifetime – care must be taken here that  gifts into trust do not impact on the status of any other lifetime gifts that have been made. Specialist tax advice should be employed when considering complex lifetime gifting, particularly using trusts, but the potential tax savings can be significant.
  • Inform your potential new clients, let them know they may be heading towards the death duty threshold and generate more leads as a consequence. You can reach more clients with Arken.legal’s lead generation tools, such as Arken Intestacy and Online Wills.

For more information about how to streamline and double the number of Wills you can produce, visit our website or read more about our comprehensive Will writing software.

Sources:

 

This article was submitted to be published by Arken.legal as part of their advertising agreement with Today’s Wills and Probate. The views expressed in this article are those of the submitter and not those of Today’s Wills and Probate.

Arken.legal

https://arken.legal/?utm_source=TWP&utm_medium=partner%20page&utm_campaign=Arken%20homepage

  Transforming the global estate planning industry through advanced technology Arken.legal provides expert digital solutions for the private client and estate planning industry. Its solutions deliver business efficiencies and consistency across a practice, while enabling client acquisition through an improved customer experience. Built by private client solicitors, Arken.legal products are used by more than 500 firms including Legal practices, Accountancy practices, Will writers and Legal services businesses in the UK, as well as Trust companies in South Africa, Australia and New Zealand. With 29 years' experience and more than 6 million Wills having been created using its products, today Arken.legal is a software as a service business offering secure, cloud-based solutions. The Arken Product Suite Businesses are turning to technology to enable change, increase efficiency and futureproof their incomes to suit upcoming generations and demand. The Arken product suite is designed for just this – to maximise productivity, provide interactivity and lead generation, and manage risk. It can suit any business process – whether instructions are taken virtually, in an office, remotely or via telephone. For increased efficiency, reduced re-keying and a delighted client, book a demonstration today to find out how we can help your practice. Key Services Arken Professional: A comprehensive, up-to-date and secure document generation solution built specifically for the Private Client Sector. Built by lawyers, its industry-leading software has produced over 6 million Wills. Arken Professional is the only software solution specialising in Wills that is accredited by the Institute of Chartered Accountants in England & Wales (ICAEW). All the products on this scheme have satisfied a robust technical evaluation and are from companies that are financially sound and offer strong customer support, giving you that extra peace of mind. Arken Intestacy: The new way to increase leads and grow your business remotely.  A handy customisable tool for your website that demonstrates the circumstances if your prospective client were to die without a Will – they can then fill in their details and ask for you to help protect their estate. Arken Online Wills: A secure, online Will service. Will packs – which include a client’s Will, a Will commentary, and signing instructions – can be sent to the client immediately or reviewed before delivery. Arken Acquire: A digital fact find and lead generation tool. A tool that captures data from your clients, which is then used in the drafting of key estate planning documents. Simply email a link to your client and they can input key information that seamlessly flows into Arken Professional for drafting. Arken Lifetime: Create Inter Vivos Trusts in a fraction of the time. Trust Referencer: Get the latest on tax treatments and specific Trusts. Access the most up-to-date information to generate a personalised report for your clients, outlining the tax treatment that are relevant to both Testamentary and Inter Vivos Trusts. Arken Anywhere: The power of Arken on-the-move. Access an offline version of Arken Professional that will synchronise with your account once you’re back online. Arken API: A seamless transfer of data and reduction of re-keying. Details shared between your case management solution and Arken Professional.       Dave Newick, Chief Executive Officer of Arken.legal, said:
“We work in partnership with our clients to understand their key processes and provide the most efficient digital solutions for their Private Client business. The industry has begun its digitisation journey – it’s time to consider the best route within it for your business. Can you use technology to be more adaptable, more engaged, to provide a better customer experience? Can you use technology to automate low-level tasks, enabling you to focus on what really matters? It’s time to take the digital leap and benefit from the efficiencies it provides.”

          Testimonials Sophie Yates, Director, Fodens Solicitors Limited
“Arken is an absolutely fantastic tool. It is extremely easy to use and has helped our practices in Will drafting to a huge extent. I could not be without it now. I would recommend to any legal specialist looking to invest in Will writing software. Very cost effective too.”
Gemma Garen, Director of Quality and Compliance, Ellisons Solicitors
“We did a careful review of available solutions and chose Arken, as it has a very user-friendly and intuitive user experience, helped us with an improvement in our working practices, introduced time efficiencies and facilitated our ability to standardise our processes and mitigate our risks. The support team at Arken are excellent – very responsive and invested time to understand our needs. We had extensive support before and after going live. Arken is very easy to use, the templates are consistent and we have reliable support.”
Craig Webb, Head of Legal Operations, Brethertons LLP
“…Our staff have found Will drafting in Arken very easy to use and enjoy the questionnaire format which guides them through the process from beginning to end. It is very reassuring to know that our lawyers are all following the same process, producing Wills with a good level of consistency and that all clauses used are up to date. Preparing ‘mirror’ Wills is now particularly easy using Arken, and the systems’ intelligence to amend third person singular pronouns (he, she, his, hers), has eradicated these type of typographical mistakes. We have recently added Arken Acquire to our subscription and are looking forward to the further streamlining of our processes that this service can offer.”
Matthew Field, Director, SMR Solicitors
“We have found Arken to be a valuable tool for our private client team in terms of efficiency and consistency and we would highly recommend it to law firms looking for a professional solution.”
Eric Britt, Executive Consultant, Integrity Wills & Legal Services
"I have been using Arken Will writing software for a number of years, and have found it excellent, and easy to use. The support from the office has been exceptional whenever I have needed it, with a quick response and great patience at times. I would certainly recommend the software and also the company without any hesitation."
Contact Details
Address: Arken.legal (UK) Limited General Wolfe House 83 High Street Westerham Kent TN16 1PG
Tel: +44 (0)1732 867792 Website: www.arken.legal
LinkedIn: arken-legal
Key Contact
Name: Bethany Crease
Tel: (0)1732 867792
Email: bethany.crease@arken.legal
Arken.legal sponsors Today’s Wills and Probate Industry Champion Award