Read time: 2 mins (approx.)

One of the most common assumptions we hear is that married couples do not need to worry about inheritance tax.

Everything passes between spouses tax free, so the thinking goes, and the problem can be dealt with later.

There is some truth in that.

Assets left to a spouse or civil partner are generally exempt from inheritance tax.

But many couples stop planning there, and that is where the difficulty begins.

Passing everything to the surviving spouse may delay the tax.

It does not necessarily reduce it.

Most married couples have access to valuable allowances that can be combined.

The standard nil-rate bands, and where available the residence nil-rate bands, can together protect a significant proportion of an estate from inheritance tax.

But those allowances do not simply apply themselves.

The way assets are owned, whether previous gifts have been made, the wording of wills, the overall value of the estate and where family property is eventually intended to go can all affect how much of those allowances are actually available.

This matters more than most people realise, particularly where wealth has grown over many years.

Property values may have increased substantially.

Investment portfolios may have performed well.

Business interests may have become more valuable than originally anticipated.

Without reviewing those changes, couples can quietly find that their estate has outgrown the plans they put in place years ago.

Good estate planning is therefore about much more than relying on the spouse exemption.

It means looking at the family’s assets as a whole, understanding how the available allowances interact, and making sure that decisions taken today do not unintentionally reduce the reliefs available in the future.

For many families, this also forms part of a wider conversation about lifetime gifting, trusts, business assets and how wealth should ultimately pass to children and grandchildren.

Every family’s circumstances are different.

The most effective strategy is rarely about chasing complicated arrangements.

It is about making sure the allowances that already exist can be used as intended, through careful planning, the right documentation and regular reviews.

The earlier those conversations begin, the more options are usually available.

To find out more about how Deep Dive Estate Planning can help, visit deep-dive-trusts.co.uk