When people think about Inheritance Tax (IHT) planning, they often assume it means making big sacrifices – gifting assets early, downsizing the family home, or tying wealth up in complex trust arrangements. For many families, that simply isn’t appealing or practical.
At the same time, few people are comfortable with the idea that up to 40% of what they’ve built could end up with HMRC rather than their loved ones. With frozen tax thresholds, rising property values and pensions due to be included in estates from April 2027, IHT is becoming a concern for more families than ever before.
The good news? Effective planning doesn’t always require radical change.
Why timing matters with Inheritance Tax
For married couples and civil partners, IHT is usually not payable on the first death due to spousal exemption. Instead, the tax bill often falls on the second death – precisely when beneficiaries may need cash to settle liabilities, without wanting to sell family assets quickly or at the wrong time.
This is where strategic planning can make a real difference.
A smart, cost-effective solution: Joint Life Second Death cover
Joint Life Second Death Term Life Assurance is designed to pay out exactly when IHT is most likely to be due – on the second death. Rather than trying to eliminate IHT entirely, this approach focuses on creating liquidity at the right moment.
Because it’s a term policy (running to a selected age such as 70 or 75), premiums are often far lower than whole-of-life insurance. For many clients, it provides a predictable, affordable way to protect family wealth while keeping assets firmly under their control.
When written in trust, the payout typically falls outside of your estate, meaning the funds can be used by your beneficiaries to settle an IHT bill without increasing the tax burden.
Keeping options open as your plans evolve
One of the key advantages of this approach is flexibility. A term policy can act as a bridge, providing protection now, while leaving room to explore other strategies later. As circumstances change, you may choose to make lifetime gifts, restructure assets, or use business property relief and trust planning as part of a wider estate strategy.
Rather than a single solution, it becomes part of a joined-up plan tailored to your goals, family and future intentions.
Why advice matters
Inheritance Tax planning isn’t just about numbers – it’s about timing, family dynamics, legislation and long-term objectives. What works well for one family may not suit another.
At S4 Financial, we help clients understand their exposure, explore their options, and put sensible, proportionate plans in place. If protecting your legacy is important to you, now is the right time to start the conversation.
Get in touch to discuss your options today by calling 01276 34932, or emailing us on hello@s4financial.co.uk.
Tax rules and legislation can change, and the value of any tax benefits depends on your personal circumstances. Estate planning, trusts and tax advice are not regulated by the Financial Conduct Authority. This article is for information purposes only and does not constitute financial advice. Professional advice should be sought before taking any action.