June tends to bring a particular kind of clarity. The school year is winding down, holidays are being planned, and for many of the families we work with, there is a natural impulse to get things in order before the summer – not because estate planning is usually ever urgent in a dramatic sense, but because a little time and a good conversation now can make an enormous difference to what happens later.
This month, we cover the pension changes arriving in 2027, a frozen IHT threshold that should be £770,000 but isn’t, a £1.2 million tax mistake the High Court set aside, a run of significant Inheritance Act and contentious probate rulings, STEP’s research on blended family disputes, and some history of eccentric wills. If anything here connects with your own situation, we are here to talk it through.
June In Numbers
- 10,500 – additional estates per year expected to face IHT once the pension exemption ends in 2027
- £770,000 – what the combined IHT threshold would be by 2027/28 if it had kept pace with inflation
- 41% – proportion of STEP practitioners who have seen an increase in blended family inheritance disputes
- £123,000 – awarded to a daughter explicitly excluded from her late father’s will
- £5 million – value of property returned to a widow after trust documents were ruled shams
The Pension Bombshell – Why 2027 Cannot Be Ignored
For decades, pensions have sat outside a person’s estate for inheritance tax purposes. Whatever remained in your pot when you died could be nominated to a beneficiary and passed on largely free of IHT. From 6 April 2027, that changes. As HMRC’s own technical guidance confirms, most unused pension funds will be brought into the estate and taxed accordingly.
HMRC estimates around 10,500 additional estates will become liable for IHT as a result, with a further 38,500 expected to pay more than before. The average increase for affected estates is projected at around £34,000. The administration process will also become more complex – pension providers will need to communicate with executors before probate is granted, adding time and potential for dispute to an already stretched system. Legal professionals are already anticipating a rise in disputes between pension trustees and executors as the rules bed in.
For many families, pensions have been a deliberate part of their inheritance planning – nominated to children, structured to sit outside the estate. That planning may now need to be fundamentally revised.
We would be happy to advise on the legal and tax aspects of how your pension sits within your wider estate plan. .
The IHT Threshold Should Soon Be £770,000. It Isn’t.
The nil-rate band has stood at £325,000 since 2009. Add the residence nil-rate band and an individual passing a family home to children can shelter £500,000. Both thresholds are now frozen until at least April 2031 – and recent analysis sets out precisely what that freeze is costing families.
If the thresholds had kept pace with inflation, the nil-rate band would stand at £537,000 by 2027/28, and the residence nil-rate band would reach £233,000. The combined figure would be £770,000 – a full £270,000 more than an individual can actually shelter today.
Government projections confirm the direction of travel. The proportion of estates subject to IHT is set to rise from 4% in 2020/21 to 7% by 2032/33 – nearly double. The tax once associated with large hereditary estates is increasingly affecting ordinary families whose homes have simply risen in value over time. The tools for managing it remain available – lifetime gifting, trusts, careful use of annual exemptions – but almost all of them require time to be effective. The later planning is left, the fewer options remain.
A £1.2 Million Mistake – And Why Precision Matters
The Fortescue family’s Boconnoc Estate is a Grade II-listed property in Cornwall that has been in the family for generations. In 2017, Elizabeth Fortescue attempted to transfer her £4.4 million life interest in the estate’s properties to her daughter Claire, using an arrangement intended to be free of inheritance tax. A procedural error meant the transfer inadvertently triggered a 20% immediate charge instead – an unexpected bill of £1.2 million.
The High Court has now set aside that transaction, describing the error as “particularly grave and unintended” given the estate’s historic significance, and ordered the transfer reversed. It is a welcome outcome – but it should not give false comfort. Courts have discretion in cases like this, and they do not always exercise it in the taxpayer’s favour. For any family using structured transfers as part of their tax planning, the lesson is familiar: precision in the paperwork, and professional oversight throughout, are not optional extras.
The Inheritance Act – More Powerful Than Most People Realise
Three recent cases are a reminder that the Inheritance (Provision for Family and Dependants) Act 1975 reaches further than many people assume – and that a failed challenge can be extremely costly:
Daughter explicitly excluded from father’s will awarded £123,000
Emma McDaniels was explicitly named as excluded in her father’s 2014 will, yet a court awarded her £123,000 from his £1.75 million estate. Judge Caroline Shea KC found that her caring contributions and a late reconciliation after decades of estrangement created “special circumstances” justifying provision. The will said no. The Act said otherwise.
Wealth is no bar to a claim
The Act is not reserved for those in financial hardship. Courts are increasingly prepared to award provision to financially comfortable claimants based on lifestyle, expectations and moral obligations. In Banfield v Campbell, a cohabitant with £277,000 in savings received housing provision. In Negus v Bahouse, a claimant received £640,000 simply to maintain her standard of living.
Pet costs included in £1 million estate claim
The claim brought by the partner of fashion designer Chris Liu includes £3,800 a year for pet food, vet bills and kennelling – a reminder of how broadly “reasonable provision” can be interpreted. The judge has reserved his ruling.
Failed challenge costs son £216,000
Jonathan Saville Thurston abandoned his challenge to his father’s will on the first day of trial. The judge called it “a case which should never have been brought” and ordered him to pay £216,000 in costs. The will stood. The costs did not.
If your will might be vulnerable to a challenge, or if you believe you have been unfairly excluded from an estate, we can advise on your position. Get in touch.
Blended Families and the Planning Gap
STEP, the professional body for trust and estate practitioners, has published research that makes difficult reading for any blended family that has not yet addressed its estate planning. Surveying 533 practitioners, the study found that 41% had seen an increase in inheritance disputes involving blended families, with conflict between children and surviving step-parents being the most common flashpoint – cited by 68% of respondents.
The picture for ordinary families is no more reassuring: 80% of UK adults had no idea of their family members’ inheritance wishes. And around 600,000 people who do not have a will are actively avoiding making one because they fear it will cause arguments. The research confirms what practitioners see in practice. Disputes rarely arise from a will’s existence. They arise from its absence, or from a will written for one family structure that was never updated to reflect another.
A straightforward “everything to my spouse” arrangement may work well in a first marriage but create significant injustice to children from earlier relationships. The planning that avoids this is not complicated – but it does need to happen, ideally long before any dispute arises.
If your family structure has changed since you last updated your will, we can help you think through the options. Contact us here.
From the Courts: Three Cases Worth Knowing
1. Teixeira: When Trust Documents Are a Sham
The High Court awarded property worth approximately £5 million to a widow after finding that declarations of trust signed by her husband in the weeks before his death were shams with “no legal or equitable effect.” Deputy Master Bowles described them as “deceitful forms of words” designed to prevent Gabriela Teixeira from accessing assets she was entitled to. The ruling also establishes that independent administrators may be required to actively protect an estate where there is credible evidence of improper diversion.
2. MacDougall v Thomas: Undue Influence and the Limits of an LPA
The High Court found that Sandra and Philip Thomas unduly influenced their elderly mother into transferring three properties worth £1.6 million, and misappropriated over £1 million from her bank accounts while holding power of attorney. The court ordered the full recovery of approximately £2.6 million – a stark illustration of what can happen when a lasting power of attorney operates without adequate independent oversight.
3. The Marquess of Bath: When Trust Language Cannot Keep Up
The High Court approved adding a child born through foreign surrogacy to the family trusts of the 8th Marquess of Bath – but only after a court application, because the trust language did not accommodate modern assisted reproduction. If your trust has not been reviewed since your family changed, it is worth checking whether the language still covers everyone you intend to benefit.
Wills That Made History Laugh
Not everything in estate planning is sombre. The history of wills is full of instructions that range from the inventive to the quite extraordinary.
- The 92-Year Wait – Michigan millionaire Wellington Burt died in 1919, deeply unimpressed with his own family. His will stipulated that his fortune could not be distributed until 21 years after the death of his last surviving grandchild. In 2011, ninety-two years later, twelve beneficiaries discovered they were sharing an estate worth $110 million. None of them had ever met him.
- The Poet’s Parting Shot – German poet Heinrich Heine left his entire estate to his wife on one condition: she must remarry, so that “there will be at least one man to regret my death.” She did remarry. Whether the second husband regretted it is not recorded.
- The Inventor in His Own Invention – Fredric Baur invented the Pringles can. When he died in 2008, he requested his ashes be buried inside one. His family honoured the wish. He was interred in an Original flavour tube in Cincinnati. As final requests go, the consistency is hard to fault.
- The Dog With a Trust Fund – Hotelier Leona Helmsley left $12 million to her Maltese dog, Trouble, while cutting two grandchildren out of the will entirely. A court reduced the bequest to $2 million. Trouble still had security guards and a personal chef for the rest of his days.
The lesson buried in every eccentric will is the same: the clearer your intentions, the fewer opportunities there are for them to be reinterpreted, contested, or decided by a judge who never met you.
Before the Summer – Your June Checklist
Estate planning rarely fails because people don’t care. It fails because the moment never seems quite right. Before you settle into the summer, it’s worth asking:
- Pensions – Have you reviewed your pension nominations in light of the 2027 IHT changes? Does your planning still make sense?
- Lasting Power of Attorney – Do you have one? Does your attorney know where it is? If not, the time to act is before you need it, not after.
- Your will – Has anything changed in the last two years – a new property, a marriage, a divorce, a new grandchild? Your will may no longer reflect your wishes.
Good estate planning is rarely about one document in isolation. It is about clarity, organisation, and doing what needs to be done before the decision is taken out of your hands. If anything in this month’s newsletter has prompted a question about your own situation, we would be glad to hear from you.
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