After several years of change to the inheritance tax landscape, the latest Budget provides an opportunity for families to take stock. But effective succession planning is about more than tax. It is also about people, relationships and making sure arrangements made today can cope with a family life that may look very different in years to come.
After several significant changes affecting inheritance tax, Business Property Relief and Agricultural Property Relief, together with the forthcoming change to the inheritance tax treatment of pensions, some families have understandably paused before making significant decisions about wealth.
Against that background, one of the notable aspects of the latest Budget from an estate and succession planning perspective was the absence of another fundamental change to inheritance tax.
That does not mean there is nothing to do. In many cases, it means the emphasis can begin to move from waiting to reviewing.
From uncertainty to planning
One important date is 6 April 2027. For deaths on or after that date, most unused pension funds and pension death benefits will be brought within the value of the deceased person’s estate for inheritance tax purposes.
That makes pensions part of a wider estate-planning conversation alongside property, investments, business interests, lifetime gifts, trusts and wills.
The starting point, however, should not simply be how to reduce a possible inheritance tax bill; it should be what the family is trying to achieve.
Passing on wealth is rarely straightforward
For some people the objective is clear: they want eventually to leave as much as possible to their children or grandchildren. The decisions involved can be considerably more nuanced.
Giving assets away during your lifetime may have advantages, but it also requires careful thought about your own financial security, income requirements and possible care needs, as well as whether the intended recipients are ready to manage significant wealth.
How much control someone wants to retain is equally important. Passing assets outright may be appropriate in some families. In others, a trust or a more gradual transfer may better reflect the circumstances and the reasons the wealth was accumulated in the first place.
Inheritance tax planning should not leave someone financially vulnerable or result in arrangements that do not work for the family in practice.
Families do not stand still
Estate planning has traditionally been talked about in fairly linear terms: one generation accumulates wealth and eventually passes it to the next. Modern family life is often less straightforward.
People are living longer. Families may include second marriages, partners from previous relationships, stepchildren and children from different relationships. Adult children may marry, divorce or establish families of their own. Some relatives may be financially independent, while others need considerably more support.
All of this can affect what feels fair within a family. Equal treatment is not always the same as an appropriate outcome. One child might already be involved in the family business. Another may have received significant financial help earlier in life. A child or grandchild could have circumstances that make an outright inheritance less suitable.
Planning can accommodate that complexity, but only if individual circumstances are properly considered.
Marriage, relationships and inherited wealth
Parents and grandparents may be comfortable passing substantial wealth to the next generation but want to consider how that wealth might be treated if family circumstances change in the future.
There are a number of ways to plan for the future of family wealth, and the right approach will depend on the individuals involved, their family circumstances and what they want to achieve. The way assets are passed down, the appropriate use of trusts and pre- or post-nuptial (or for unmarried couples, cohabitation) agreements can all play a part.
By bringing together Private Client and Family expertise, we can help clients consider the options available and put arrangements in place that reflect their family circumstances and longer-term intentions.
For the younger generation too, discussing these issues early can be helpful. A carefully considered pre-nuptial agreement, for example, can provide greater clarity around how inherited or family wealth is intended to be treated and form part of wider family and succession planning.
The purpose is not to plan on the assumption that relationships will fail. It is to recognise that circumstances can change over the course of a lifetime and to consider that possibility while there is time to plan carefully.
When the wealth includes a family business
The position can become more complicated where a family business or farming enterprise forms a significant part of an estate. Here, the interests of the individual, the wider family and the business may overlap without being identical.
One child may work in the business while their siblings do not. Passing equal shareholdings between them might look fair on paper but could create difficulties around decision-making or control. Leaving the business to one child raises a different question: how can others be treated fairly if much of the family’s wealth is tied up in it?
Early and open conversations can make a real difference here. Our Inheritance and Trust Disputes specialists see first-hand how difficult it can be for families when expectations around inheritance, ownership or the future of a family business have not been discussed or clearly documented. Addressing these questions while relationships are good gives family members an opportunity to understand different expectations and can reduce the scope for misunderstanding later.
These may not always be easy conversations, but they can help preserve family relationships as well as provide clarity about the future of the business and wider family wealth.
Since 6 April 2026, a £2.5 million allowance has applied to the combined value of qualifying agricultural and business property receiving 100% Agricultural Property Relief or Business Property Relief. Relief at 50% generally applies to qualifying relievable property above the allowance. Any unused amount of the allowance can be transferred to a surviving spouse or civil partner.
Those rules make careful planning more important for families with significant qualifying business or agricultural assets. But the underlying questions are not purely about inheritance tax. They are about what happens to the asset, who should control it and how the needs and expectations of different family members can be balanced.
The best answer cannot usually be reached by looking at the tax position alone.
Planning for the life you have now, and the one you might have later
A good succession plan should not be something that is completed once and put in a drawer.
A marriage, divorce, bereavement, birth, business sale, retirement or significant change in wealth can all provide reasons to revisit it. Even where nothing dramatic has happened, arrangements made many years ago may simply no longer reflect the people or priorities involved.
The latest Budget provides a useful moment to do that. For some families, existing arrangements may remain appropriate. For others, a review may prompt changes to wills, trusts, business succession arrangements or lifetime gifting. Sometimes it may simply show that a family conversation needs to happen before any legal changes are made.
These issues rarely sit neatly within one area of law. A decision about passing wealth to the next generation may have implications for a family business, a trust or someone’s personal circumstances. At Stephens Scown, our Private Client lawyers can work with colleagues in our Family, Corporate and Inheritance and Trust Disputes teams, as well as clients’ existing financial and tax advisers, so that the different considerations can be looked at together.
Tax matters, but so do control, security, relationships and the reasons behind passing wealth from one generation to another.
The aim is not simply to plan for the rules as they stand today. It is to put arrangements in place that can continue to work as life changes.