With summer just around the corner and longer, warmer days ahead, many are taking stock of their finances and thinking about the future. At Clarke & Wright, we believe this season of change is the perfect moment to focus on your estate planning, especially with major inheritance tax and pension reforms on the horizon.
In our June newsletter, we explore how upcoming pension changes will impact inheritance tax, highlight often-overlooked strategies to reduce tax liabilities, and share cautionary stories that show why early, clear planning is more important than ever. Whether you’re preparing for the future or starting vital conversations today, our newsletter offers expert insights to help you safeguard your family’s legacy.
Pensions to Face Inheritance Tax: Experts Urge Early Planning
Upcoming legislative reforms are set to significantly change how pensions are treated for inheritance tax (IHT). Unused pension pots are expected to be included in the IHT calculation from April 2027. This marks a major shift from the current rules, where pensions typically fall outside the estate for tax purposes.
Previously, advisers often recommended drawing from taxable investments first to preserve pensions as a tax-efficient estate planning tool. With the proposed changes, this strategy may no longer be viable. In some cases, pension beneficiaries could face double taxation – IHT on the pot and income tax on withdrawals, particularly if the pension holder dies after age 75.
As a result, many individuals are reassessing their financial plans. Strategies like withdrawing tax-free cash and making lifetime gifts under the ‘seven-year rule’ are gaining popularity. The shift is also influencing younger savers, for whom the IHT advantage was a key motivator to invest in pensions early.
Interest in life insurance is growing, with policies placed in trust increasingly used to offset potential IHT liabilities. Advisers are also encouraging clients to draw pension income up to the higher-rate threshold and redirect surplus funds through gifting or IHT-efficient investments.
Personalised cashflow modelling has become essential in navigating these changes. By analysing how pensions, taxes, and investments interact, clients can make more informed decisions and adjust their plans to protect family wealth over the long term.
Inheritance Process Confuses Two in Five UK Adults
Many UK adults remain unclear about inheritance tax (IHT), probate, and where to get help when named in a will. Research shows 39% don’t understand what happens when they inherit, rising to 57% for those under 35. Misconceptions persist, with 42% believing they have nothing to inherit and a third thinking IHT only affects the wealthy, despite rising concern about potential tax bills.
Probate professionals say the system is slow and confusing. Many support the idea of inheritance advance loans to cover IHT before probate is granted, easing cashflow and helping beneficiaries avoid penalties. The findings highlight the need for clearer information and better tools to navigate the inheritance process.
Over the past three years, the number of estates taking over a year to receive a grant of probate has more than doubled, with Ministry of Justice data revealing a 65% increase in such delays, according to new analysis of Freedom of Information figures.
Only 2% of Estates Use Surplus Income Gifting Rule, FOI Reveals
A Freedom of Information (FOI) request has revealed that only 2% of estates used the “gifts out of surplus income” inheritance tax (IHT) exemption in the past three years. Despite its immediate tax benefits, this relief remains one of the most underutilised tools in estate planning.
Between 2019 and 2022, just 1,490 estates claimed the exemption, which allows individuals to make tax-free gifts from their surplus income without needing to survive seven years, a requirement for most other gifts. The low uptake is attributed to strict HMRC documentation requirements, including evidence that the gifts were made regularly from income and did not affect the donor’s standard of living.
However, the rule may gain renewed interest following upcoming pension reforms. From April 2027, unused pension pots will be included in the taxable estate, potentially exposing them to IHT at 40% above the nil-rate band. Previously, pensions fell outside the IHT net, making them a preferred estate planning tool.
With this change, advisers expect more individuals to explore alternative strategies, including surplus income gifting, to reduce future IHT liabilities. While the relief requires detailed record-keeping, it offers immediate tax efficiency for those with sufficient income to gift regularly without impacting their financial stability.
Advisers are encouraging clients to plan ahead and seek advice to ensure compliance and take advantage of this overlooked opportunity.
No Will: Liam Payne’s £24.3m Fortune Passes by Default to His Son
Liam Payne, a former One Direction singer, died in October 2024 after falling from a hotel balcony in Buenos Aires. He left no will, and court documents reveal his £28.6 million estate, reduced to £24.3 million after debts, will be passed to his son under intestacy laws. His former partner and lawyer have been granted temporary control of the estate until full administration is granted.
Under UK intestacy rules, Payne’s 9-year-old son is the sole heir. His girlfriend at the time, friends, and extended family are not legally entitled to inherit, no matter the closeness of their relationships. This case highlights the often harsh and unfair impact of intestacy laws, particularly on cohabiting unmarried couples, who have no automatic right to inherit, even after many years together. Without a valid will, partners can be left with nothing.
Legal professionals and commentators have pointed to the lack of planning, especially given Payne’s profile and access to advisors. Estate experts note this case as a clear example of how even high-net-worth individuals often fail to put basic protections in place.
Without a will, Payne’s personal wishes may never be realised – whether related to family, charitable giving, or management of ongoing royalties. Legal bodies have used the case to reiterate that estate planning is essential for everyone, regardless of age or wealth. With fewer than half of UK adults having an up-to-date will, many families risk being left in legal and financial uncertainty.
‘Dead’ Woman Crashes Court to Expose £350k Property Fraud
June Ashimola left the UK for Nigeria in 2018. In her absence, fraudsters claimed she had died in 2019 without leaving a will and used a falsified death certificate to obtain a power of attorney over her £350,000 London property. The power was granted to Ruth Samuel on behalf of Bakare Lasisi, who was presented as Ashimola’s husband from a 1993 marriage.
The case was brought before High Court judge John Linwood, who was shown a copy of the alleged death certificate and told sightings of Ashimola were of a woman “masquerading” as her. But in a dramatic twist, Ashimola appeared live via video to confirm she was alive and had never married Lasisi, calling the documents “fraudulent” and the PoA “improperly obtained.”
Judge Linwood found no credible evidence supporting the claim of her death, ruling the death certificate a forgery and revoking the power of attorney. He also criticised the “disproportionate” legal costs of over £150,000 – a sum that may surpass the property’s equity. The court noted that even Lasisi may have been a fabricated identity, as no conclusive evidence of his existence was presented.
Partner vs. Family in £18m Inheritance Clash
The family of a late health drinks executive has won an appeal to reinstate their claim to half of his £18 million estate. The dispute arose following the death of Alan Lorenz, a senior figure at nutritional supplements company Herbalife, who passed away in 2021. Lorenz’s estate included high-value assets such as a £4 million Mayfair property, a £3.5 million home in Malta, nearly £9 million in cash, and over £2 million in business rights.
Shortly before his death, Lorenz entered a civil partnership with his long-term partner, Sheila Caruana, and left his entire estate to her in a 2020 will. His siblings contested the will, claiming Lorenz had instructed Caruana to divide the estate and “do right” by the family. Initially dismissed in 2024, their claim has now been revived by the Court of Appeal.
The case hinges on whether a “secret trust” existed – an informal agreement under which Caruana would inherit the estate tax-free but pass on half to the siblings. While a High Court judge initially ruled there was insufficient evidence to prove such a trust, Lord Justice Zacaroli overturned that decision, citing contemporaneous records suggesting Lorenz had expressed a clear intent to benefit his siblings. This included a solicitor’s note indicating he wanted everything to go to Caruana “tax free,” with her later gifting “millions” to his family.
The appeal court found enough documentary evidence to justify a full trial, particularly in light of Caruana’s limited testimony and lack of formal disclosure. The case will now proceed to the High Court unless resolved beforehand.
Just 15% of Parents Talk to Children About Inheritance
A new YouGov survey of 2,000 UK adults reveals a widespread reluctance to discuss inheritance. Just one in six parents over 55 have had the conversation with their children, despite the growing complexity of modern estates. Women (19%) are almost twice as likely as men (10%) to raise the topic.
Experts warn that this silence may lead to more families ending up in court when expectations clash with reality.
The survey also found:
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Only 48% knew a valid will must be signed in front of two non-beneficiary witnesses
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45% of widowed individuals talk to their children about inheritance, the highest among all groups
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Divorced or separated parents were nearly twice as likely to have had the conversation (28%) compared to the average (15%)
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Nearly 1 in 20 respondents (4%) had already been involved in a legal dispute over a will, trust, or estate
Inheritance disputes can be emotionally and financially draining, often triggered by poor communication or a lack of clarity.
Experts recommend open, honest conversations to avoid misunderstandings. With legal frameworks allowing certain family members to contest a will, clear communication and proactive planning are more important than ever.
Prepare for the Summer: Take Control of Your Estate
Summer’s on its way, so it’s time to secure your legacy with confidence. At Clarke & Wright, we understand that changes to inheritance tax and pension rules can feel complex, but early planning makes all the difference. Whether you’re reviewing your will, exploring tax-saving strategies, or starting important family conversations, our experienced team is ready to support you every step of the way. Let this season of growth inspire you to take control of your financial future. Contact us today and make a plan that protects what matters most.