If your client invested in shares that qualify for business property relief (BPR) and held them for at least two years before they died, their estate should be able to claim BPR, which is another way of reducing a potential IHT bill.
Executors will need to make a claim for BPR when completing the IHT return for the estate.
They need to do this using forms IHT400 and IHT412, which are available from HMRC.
Advising beneficiaries
As well as helping executors with the administration of your client’s estate, you can also add value by advising the beneficiaries on their options once they inherit any investments.
Typically, some beneficiaries will act as executors for a client’s estate as well.
If possible, it is a good idea to start this conversation with beneficiaries before probate has been granted.
This gives beneficiaries more time to assess their options and reduces the risk that they will miss out on potential benefits because they didn’t know about them.
The key areas where beneficiaries might need support include:
- Accessing investments. Providing liquidity, setting up withdrawals or making a sale.
- Isa rules for spouses. Beneficiaries may be able to benefit from the latest Isa rules for deceased estates, which they might be unfamiliar with.
- Multiple beneficiaries. If there is more than one beneficiary, you can play a key role in helping each party work towards their objectives.
- Trusts. It may be in the best interests of the beneficiaries to settle any assets held by the deceased into a trust. Trusts can be complex and it’s likely that beneficiaries will need your guidance to do this correctly.
- BPR-qualifying shares. If the beneficiary inherits any BPR-qualifying shares, there could be significant tax benefits to retaining the shares rather than selling them. You can add a lot of value to the beneficiaries when it comes to their options, in particular if you were the professional, who originally advised on this investment.
Building a relationship with a client’s beneficiaries early on can have a direct and positive impact on planning outcomes.
It is also a great opportunity for you to provide advice to the next generation and keep assets under management.
After all, beneficiaries are much more likely to come to you for advice if you have already established a good relationship with them.
Over the next 30 years, an estimated £5.5 trillion is due to be passed between generations in the UK.
And as things stand, the bulk of those transfers will involve beneficiaries who are not currently advised.
Advisers need to be proactive
Be proactive, and ready to step in quickly when your client passes away.
