When a client has lost capacity and a power of attorney is in place, estate planning can become more complex.

A tax-planning solution

One option is to invest part of the estate into Business Relief (BR)-qualifying investments. These can benefit from IHT relief after two years, provided they are still held at the time of death.

An investment like this is typically available to an attorney, as the investment is made in the client's name and it is deemed reversible - unlike a Gift or settling assets into trust.

This approach allows the attorney to:

• Act out the client's wishes of reducing the IHT liability
• Maintain flexibility, as BR investments can often be sold if funds are needed in the future

If you have clients with a power of attorney in place or clients who act as an attorney for others and are concerned about IHT, this could be a valuable solution.

How it works in practice

Summary

When a client has lost capacity, estate planning options become more limited - but not exhausted. Provided the qualifying conditions are met, a Business Relief-qualifying investment may still be made in the client’s name, as it is considered reversible rather than a Gift. This means it can qualify for IHT relief after two years while preserving flexibility if capital is needed (subject to liquidity).

Try our Inheritance Tax Calculator

Quickly estimate Inheritance Tax liabilities and model the impact of Business Relief strategies with our easy-to-use calculator. Designed for financial advisers, it helps bring planning to life and support client conversations.

This tool is strictly for the use of financial advisers only.

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