How to Leave the Maximum Amount to Your Children

Inheritance is an important part of the financial planning process for any parent.

Working with a financial planner will help you to leave the maximum amount to your loved ones.

Put your assets in a Trust

If you put some of your money, property or other investments into a Trust, it will no longer be classed as part of your estate for IHT purposes – if your spouse or children under 18 years are unable to benefit from it.

One example might be that you establish a Trust fund to help your adult children to pay for your grandchildren’s education.

Trusts are a complicated area of personal finance, however, so you should seek financial advice when you are looking to establish yours. One complication, for example, is that all Trustees pay Income Tax at a rate of 45%, and Capital Gains Tax at 28%

Give money to your family, but not your spouse

If you give some money to one of your children and you live for a further seven years, it won’t be accounted for when IHT is calculated. There is a cap on how much you can give each year without having to pay IHT (£3,000 per year), but limited amounts are permissible.

Please note that there could be additional Capital Gains Tax charges on certain assets that you wish to gift during your lifetime.

Gifting & Taper Relief 

Taper relief is an inheritance tax (IHT) relief that offers a gradual reduction in the amount of IHT due on gifts made within 7 years of death. A common misunderstanding is that taper relief achieves its tax saving by reducing the transfer of value.

Cover loss with a life insurance policy    

If you take out a life insurance policy, the pay-out could help your loved ones pay the bill. The policy won’t reduce the amount of IHT due on your estate, and you need to ensure that you put the policy into a trust. If you don’t, it will increase the value of your estate and you will need to pay more tax.

Leave money to charity

Of course, leaving money to a charity is morally enriching, but it might also add value to your family, too. If more than 10% of the estate is left to charity, the donation will either be taken off the value of an estate before IHT is calculated, and/or reduce the IHT tax rate.

If you pursue this option, your IHT rate will be recalculated to 36% rather than 40%. While this saving is not massive, it could mean that your loved ones receive more than they would otherwise, and your chosen charity will also benefit.

This rate is set against the balance of the estate to the extent that it exceeds the available nil-rate band.

Whichever strategies you wish to pursue, gpfm financial planners can help you achieve your inheritance targets, giving you total peace of mind about your children’s future. Contact our Chartered Financial Planners on 01992 500261 or on

This article is for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions. Investments can go down as well as up and you may get back less than you invested.