Thanks to smart estate planning, Sir Bruce Forsyth has saved his family from a large Inheritance Tax (IHT) bill. By leaving his wife Lady Wilnelia Merced his estate, he managed to avoid a hefty amount of tax being payable on it.
Because the couple were married, the legacy Wilnelia inherited was exempt from IHT. She had also taken control of his business weeks before he died, meaning that she wouldn’t have to pay any tax on the profits. Although Wilnelia inherited the £11.7 million estate, Bruce did leave a Letter of Wishes asking that she give a large part to his children.
Despite not leaving any assets directly to his children in his Will, he had set up a Trust for his nine grandchildren. After turning 21, they will each receive a share of the £100,000 placed there. Bruce also organised two further payments of £20,000 for two Executors of his Will.
The late entertainer was known for his views on IHT, revealing in an interview, “I think your inheritance should go to your children more than back to the country you’ve lived in. I think that it can be a bit over the top.”
If Wilnelia decides to follow her late husband’s wishes, Bruce’s six children could receive up to £650,000 each, free from IHT. However, she would have to live a further seven years after she made the gifts for them to be exempt from the tax. She could also ignore Bruce’s wishes, as this isn’t a legally binding method of passing on assets.
Although Sir Bruce seems to have successfully and legally lowered his tax bill, there are alternative methods which don’t rely on spouses outliving gifts and following letters of wishes.
With a Family Protection Trust, you can give away part of your estate during your lifetime. Because the gift is made via a Trust, you won’t pass on a large tax bill. There are many other planning strategies available, including reviewing your Will and using investments. As you’ll need professional advice, it can be a good idea to use a Tax Planning Report service. And, it’s important to note that while a life insurance policy can make it easier for your family to pay the bill, it won’t reduce IHT.
Inheritance Tax can be confusing and overwhelming. Our team of experts can help you make the best decisions for your specific situation. Get in touch today.