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Will your life Insurance Policy increase your Inheritance Bill?

If you have arranged life insurance to protect your family, business, friends etc from the financial consequences of an early demise, did you also arrange for it to be placed in Trust for the people you want to benefit?

Cover can be cheap if you do it on-line but do it wrongly and 40% of the benefit could go to the government.

This is particularly relevant here in the South East as property values can easily push your estate above the Nil Rate Band for Inheritance Tax, which is currently 325,000 plus 100,000 Residence Nil Rate band if applicable.

If the payment from the Insurance Company goes to your Estate and takes your total above that level then there could be 40% Inheritance Tax to pay; that’s 40,000 on a 100,000 policy!

Aaahhh, I hear you say but there is no Inheritance Tax between Spouses or Civil Partners! True, but suppose a couple die together or the partner is in care and in many other awful circumstances who would you would want to get the insurance payout, your children perhaps?

A Trust can solve all these problems ensuring that the funds end up in the right hands Inheritance Tax free.

I cannot go into fine detail on all the various type of Trust in this article but they can be quite simple, very effective and economical, all you really need to decide is what you would want to happen to the insurance payout in various circumstances, your adviser can do the rest.

Yes your Independent Financial Adviser (IFA) not only can they source the right type of cover for you at the right price but they can also ensure any payout goes to the right people at the right time. You can even put existing plans into a Trust if that’s the right thing to do.

Alternatively you could always leave 40% of your assets to the government! See your IFA a.s.a.p.


Parents on the run

You may have seen recent coverage of a case concerning two brothers, aged 6 and 9, who were abducted by their mother, Samantha Baldwin, because she feared they were suffering abuse at the hands of their father.  In the face of a court order, Samantha took her two boys and went on the run.  Sadly, the end result is that the boys have been removed from the care of either parent and are now the responsibility of the Local Authority.

Fortunately, cases like this are rare.  But what can one parent do if the other takes a child and goes on the run?

The first and most important thing is to act quickly.  Of course, the longer since the child has been removed, the more challenging it will be to locate them.  It is also important to notify the police, although our experience is that the response can vary greatly – from providing prompt assistance to simply stating that it is a matter between private individuals.

We would recommend that you seek legal advice immediately, because any application to the court must be made without delay.  There are a number of orders which the family court can make to help ‘left behind’ parents locate the whereabouts of their child.  The court can also order that the child be returned to the location from which it was abducted and it can further prevent the runaway parent from removing the child from its current location until the court has made an overall decision about what will happen next.  In the most serious of circumstances, the family court has the power to make a child a Ward of the Court, removing him or her from the care of both parents – but this is very unusual.

Complications arise when the child has been taken from a location in England or Wales to another country, as the legal jurisdiction will be different. 

There can be few things as stressful and upsetting as not knowing the whereabouts of your child and/or fearing for their safety.  At Birkett Long we will clarify your options and advise how best to handle the situation.  Once the immediate difficulties have been overcome, we’ll help with Child Arrangement Orders that say who a child is to live with and how much time the child should spend with the non-resident parent.

Muntech Kaur is a specialist in our family law team.  You can contact her on 01268 824938 or email muntech.kaur@birkettlong.co.uk.




Birkett Long LLP is authorised and regulated by the Financial Conduct Authority (No: 654458)