When our client, a 73-year-old widow with three adult children, first came to see us in early 2023, she was faced with the issue of significant assets but no clear plan for how to protect them for the next generation.
Having recently sold the large family home and moved to the coast to a property worth £750,000, her total estate value was approximately £1.7 million.
Despite her substantial wealth, our client felt financially disorganised. She held money across many accounts and investments, including around £700,000 in cash, £300,000 in Stocks and Shares ISAs, and a modest pension valued at around £30,000. However, she had no real strategy and was understandably concerned about her Inheritance Tax (IHT) liability. Alongside her late husband, she had worked hard throughout her career and wanted to maximise the legacy left to her children.
At the time we first met our client, her estimated IHT bill was around £280,000, and she was worried about the financial burden that this would leave for her children.
Our client’s problem
Our client faced several key issues as a result of her lack of financial direction:
- Excessive cash holding being eroded by inflation
In 2023, inflation sat at around 7-8%, while banks were offering interest rates around 4%. This meant that her large cash holdings were losing buying power year on year.
- FSCS protection risks
Several of our client’s bank accounts held over £100,000 in cash. At the time of our initial meeting, this posed a significant risk as the Financial Services Compensation Scheme (FSCS), only guaranteed protection for up to £85,000 per institution in the event of failure. This exposed a considerable amount of our client’s wealth to institutional risk.
(From 1st December 2025, the Bank of England has increased the FSCS protection amount to £120,000 per eligible person, per authorised firm).
- No estate planning structure
Perhaps most significantly, our client’s estate had no protection against IHT liabilities, and no strategy in place to reduce said liabilities, which would eventually fall on her beneficiaries.
Our recommendations and implementations
After speaking to our client to gain a full understanding of her financial concerns and long-term goals, we put together a financial strategy which simultaneously addressed her worries while maintaining her financial security.
Our financial strategy revolved around two trust-based plans:
- A Loan Plan for consolidation, access and IHT planning
Half of our client’s cash and investments were placed into a Loan Trust. This strategic move delivered several key benefits:
- Consolidation of her scattered investments easing administration and feelings of uncertainty.
- Potential for returns above inflation, improving her long-term position and minimising the risk of wealth erosion.
- Access to the originally loaned amount so these funds remained available to her for income or lump sum requirements.
- Growth on her investment sat immediately outside her estate, immediately exempt from any IHT liability.
Today, our client’s investment within the Loan Trust has generated approximately £220,000 of growth, all of which is outside her taxable estate.
She can now begin taking withdrawals from her original loans, which not only supports her lifestyle but also further reduces her taxable estate.
- An Enhanced Gift Plan
£170,000 of our client’s cash was placed into an Enhanced Gift Plan, which triggered the seven-year rule clock in July 2023.
This money was placed into an Investment Bond, from which 4% per year is withdrawn to fund a Whole of Life policy. This policy guarantees an immediate, tax-free payout of £193,000 upon death, which can be used by her beneficiaries to pay a large portion of any residual IHT bill.
Combined with our client’s nil-rate bands, this arrangement effectively protects around £1.48m of value within her estate. This is the £325,000 nil-rate band and the £175,000 residence nil-rate band as well as the same inherited from her late husband. The Whole of Life policy then provides a tax-free payout to cover a further £482,500 of her estate.
2 Years Later: How Cooper Associates Wealth Management helped
Without the strategic plan put in place by her financial adviser, our client’s IHT liability would now be approximately £320,000 based on the savings returns that were being generated – an amount that her beneficiaries would have had to cover in its entirety.
Due to the measures taken to minimise her liability and protect her estate, our client now has:
- A reduced IHT liability of around £275,000 as growth has fallen outside of her estate and gifting allowances have been used.
- Guaranteed Whole of Life cover of £193,000, intended to be used by her beneficiaries to pay off part of the liability, meaning:
- A net beneficiary liability of approximately £82,000 – around a quarter of what it would have been without planning.
- A six-figure sum in growth outside of her estate thanks to the Loan Plan and Gift Plan growth.
- The £170,000 initial Gift Plan investment is now 2.5 years into the 7-year clock.
Are you ready to take control of your estate?
If, like our client, you’re looking for clarity, confidence and a clear plan to minimise your IHT liability to maximise the wealth you leave to future generations, Cooper Associates Wealth Management’s team of expert financial advisers are here to help.
We believe that financial advice is about more than one-off meetings, but about building long-term, lasting relationships. That’s why we take the time to truly understand your unique financial circumstances, creating a bespoke financial plan designed to help you reach your goals and alleviate your concerns.
Get in touch today to arrange your personalised, zero-obligations consultation and discover how you can secure more of your wealth for the people who matter most.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
