How can I protect any inheritance I leave? (Continued)

It can be quite tricky to make this work properly because you need to set up a trust so the policy pay-out does not form part of the deceased's estate. Without doing this you would only increase the tax bill your family would need to pay.

The funds are paid to the trustee of the trust, who then passes them on to the beneficiary to meet the tax bill. If you have ensured the funds go into a trust, probate should not be a problem and the insurance company will usually pay an accepted death claim pretty quickly.

If you're considering life insurance to cover a future potential IHT liability, the most suitable policy is likely to be a 'whole of life' plan.

These plans will normally be set up inside a trust with the beneficiaries being named and the prospective heirs to your estate. It's encouraged you seek the help of a financial adviser for setting these sorts of plans up due to the fact that this area of financial planning is quite complex and you should seek independent advice from suitably qualified and specialist adviser, potentially one that has passed the advanced financial planning certificate.

Next:Are there other uses for inheritance tax planning?

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