Published: 28/04/2025 By Oliver O'Brien
When we think about estate planning, many of us imagine it's something only the wealthy or elderly need to worry about. With property prices ever-increasing and recent legislative changes adding pensions back into people’s estates, more and more people are falling into the Inheritance Tax trap.Overlooking it, or even putting it off, can have real consequences, particularly when it comes to paying the tax bill.
One of the most overlooked problems is that you cannot usually access the assets of an estate until after IHT is paid ..... so how will you pay the IHT bill?
The Catch-22
Inheritance Tax is due six months after the person’s death. You may not be able to directly access most of the estate’s assets until the tax is paid and probate is granted. While some institutions allow for direct payment, this system is voluntary and not all participate.
This can create a cashflow crisis for the representatives of the deceased’s estate:
- They need money to pay the tax.
- But they can’t access the estate’s money until they’ve paid the tax.
- Sometimes there are insufficient liquid assets left behind to pay the bill - this is increasingly common where an estate is primarily made up of property.
- Sometimes representatives are forced to take out high risk, expensive loans or set up long term repayment plans to HMRC.
What can be done?
Fortunately, there are options to mitigate or plan for paying Inheritance Tax to avoid these unpleasant scenarios. Estate planning isn’t just about passing on wealth, it’s about avoiding chaos, stress, and avoidable costs for loved ones. Steps taken now can mean the difference between a smooth transition and a financial logjam at the worst possible time.
Now is the time to have that conversation. Speak to one of our financial advisers today to discuss estate planning options by calling us on 0208 661 7878.