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Seven-year hitch

Lots of people do it, but there is a specific reason not to delay financial planning after receiving an inheritance, says Scott Gallacher

17 October 2013

I met two new clients recently with fairly similar ages and circumstances. They were quite wealthy, having received an inheritance, and their bequests had already borne inheritance tax (IHT) on the death of their parents. Both clients knew the sum would bear more tax when they died.

But the similarities stopped there. Although the first client received their inheritance earlier this year and saw me recently, the second had waited for a little over two years to do so.

A lot of people delay their financial planning, but although unnecessary delay is probably bad in general terms, there is a specific reason not to postpone action after receiving an inheritance. The reason is a two-year window after a death, which gives a one-off opportunity to use a planning device known as an instrument of variation.

The main way to avoid inheritance tax is to give assets away, of course, and this chimes with the...

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