Inheritance Tax  

How to engage with clients’ beneficiaries

  • List the benefits of engaging with clients’ beneficiaries as part of intergenerational planning.
  • Identify ways to help a client’s executors and beneficiaries during the probate process.
  • Describe the opportunity for taking on beneficiaries as clients.

This is where a skilled adviser can help, talking to a client about the practicalities of planning and encouraging them to speak to beneficiaries.

Where practical, it may be an idea to invite a beneficiary to join part of a planning meeting so they have an idea of how planning works and how it could benefit them. 

Clients often report a great sense of relief when they finally have what is a difficult, but important, conversation.

Smoothing the process

Involving beneficiaries can also help the probate process run more smoothly.

Some beneficiaries will act as executors for a client’s estate. This could involve making decisions on what to do with investments and in what form to distribute them.

Beneficiaries in this situation should benefit from financial advice, as should solicitors, who may not be familiar with a client’s investments.

Advisers who have already introduced themselves to beneficiaries are in a good position to work with them during this period. 

Legacy planning

Advisers can retain assets under advice by taking on beneficiaries as clients.

The intergenerational planning advisers do for clients can go hand-in-hand with legacy planning for their own business.

New research commissioned by Octopus Investments shows that the majority of people who expect to receive an inheritance do not currently have a financial adviser.

The research revealed that two-thirds of those expecting to inherit more than £250,000 do not have a financial adviser, which rises to 83 per cent among those who expect to inherit £100,000 to £250,000.   

Just as an adviser can add value during the probate process, they can also do so for beneficiaries about to receive an inheritance, in some cases taking them on as new clients.

Helping executors and beneficiaries during the probate process

Deciding what to do with investments that form part of an estate is a financial decision, and beneficiaries and executors should get financial advice.

If you advised on the investments in the first place, you should be well placed to provide this.

This section looks at ways an adviser can support executors and beneficiaries during the probate process.

Understand the investments your client made

Do not assume solicitors or executors will be familiar with your client’s investments. Very often that will not be the case.

At Octopus Investments, we had a case where we got in touch with an executor and, at first, they were not that keen to talk to us.

However, when we spoke to them about the investment, it became clear the executor did not realise it qualified for BPR, and so could be passed on free from inheritance tax. That single phone call saved the estate £40,000 in tax.

This highlights the value of making sure executors and solicitors are aware of what estate planning has been done, especially if it involves investments that could qualify for inheritance tax reliefs like BPR.