Why a will should be reviewed as a tax document, not simply signed and forgotten
Imagine the following conversation.
A client comes to see us with a will prepared perhaps ten or twelve years ago.
“I have everything sorted,” he says. “My wife gets everything, then it goes to the children. The solicitor dealt with the will years ago.”
We ask a few more questions.
He was born in Italy but has lived in the UK for 16 years. He owns the family home in England, still owns an apartment in Italy, has shares in a successful private trading company and a substantial pension. His wife has spent considerably less time in the UK. There are two adult children. The will contains a trust because, when it was written, somebody told him that this was “better for inheritance tax”.
Nothing about the family feels particularly unusual.
But from an inheritance tax perspective, almost every sentence above matters.
The problem is not necessarily that the will is badly written. The problem is that the tax world in which it was written no longer exists.
And that is where a perfectly respectable estate plan can become an expensive one.
A will is not an IHT calculation
There is a dangerous assumption in estate planning that once a will has been signed, inheritance tax planning has also been dealt with.
It has not.
A will determines how assets pass on death. Inheritance tax then applies to the legal consequences of that document, together with the ownership of the assets, the residence status of the deceased and beneficiaries, available exemptions and reliefs, lifetime transactions, trusts and, increasingly, pensions.
The distinction is fundamental.
What the testator wanted to happen is important from a family perspective. What the document actually causes to happen is what matters for tax.
A clause intended to protect a spouse may not qualify for the spouse exemption in the way the family expected. A trust intended to provide flexibility for children may interfere with the residence nil rate band. A foreign property which was historically thought to sit outside UK IHT may now be exposed. Business assets assumed to receive unlimited 100% Business Relief may no longer do so.
The tax analysis has to follow the legal and economic reality.
Back to our client
Suppose our hypothetical client—let us call him Marco—signed his will in 2015.
At that time, advisers looking at his foreign estate would have been thinking principally in terms of domicile and deemed domicile.
That is no longer the starting point.
From 6 April 2025, the UK moved to a residence-based regime for determining the IHT exposure of foreign assets. Broadly, an individual who has been UK tax resident for at least 10 of the previous 20 tax years can become a long-term UK resident for IHT purposes. Once within the regime, overseas assets may fall within the UK IHT net. Furthermore, leaving the UK does not necessarily switch that exposure off immediately: depending upon the individual’s residence history, the IHT “tail” can continue for between three and ten tax years.
Marco’s Italian apartment therefore cannot simply be labelled “the Italian property” and ignored when his UK estate plan is reviewed.
We need to establish whether he is a long-term UK resident, what assets are within scope, how the property is owned, what the Italian succession consequences are, whether another will exists in Italy, and how the UK and Italian positions interact.
That is not simply will drafting.
That is cross-border estate tax planning.
“Everything goes to my wife” may need a closer look
The next assumption we frequently encounter is that anything passing between spouses is automatically free of IHT.
Often it is. But internationally mobile couples require more care.
Under the post-6 April 2025 rules, where the person making the transfer is a long-term UK resident but the spouse or civil partner receiving it is not a long-term UK resident, the spouse or civil partner exemption can be restricted. HMRC’s current guidance provides that the exemption is limited to the nil rate band applicable at the date of transfer—currently £325,000—and previous qualifying transfers can use up part of that limit.
For a wholly UK couple this issue may never arise.
For an Italian-British family where one spouse arrived in the UK many years before the other, it can be central to the estate plan.
So when a client tells us, “I leave everything to my wife, therefore there is no inheritance tax”, our answer is not automatically yes.
Our answer is: let us test it.
That is a recurring theme in good IHT planning. Never rely on the label attached to the arrangement. Test the tax result.
The family home: where £175,000 can disappear surprisingly easily
Marco’s will also contains a discretionary trust for his wife and children.
There may be perfectly legitimate family reasons for such a trust: asset protection, flexibility, children from earlier relationships, vulnerable beneficiaries, concerns about divorce or simply a desire not to place substantial assets immediately into the hands of the next generation.
But a trust must also be examined through the IHT rules.
The residence nil rate band is currently £175,000 and can apply where a qualifying residence is inherited by direct descendants. It begins to taper away where the value of the estate exceeds £2 million, at a rate of £1 of relief for every £2 above that threshold. Unused relief can potentially be transferred between spouses or civil partners.
The important word, however, is not merely children.
It is how the children inherit.
Certain trust arrangements can prevent the residence from being “closely inherited” for these purposes. Other qualifying trust structures may produce a different answer. The precise drafting therefore matters.
Losing £175,000 of residence nil rate band can represent up to £70,000 of additional IHT at the 40% rate.
That is quite a price to pay for discovering, after death, that a trust clause did not do what everyone assumed it did.
The business: yesterday’s relief is not necessarily today’s relief
Marco also owns shares in the family trading business.
For years, many business owners became accustomed to hearing that qualifying business assets could obtain 100% Business Property Relief.
Again, that sentence can no longer simply be repeated without qualification.
From 6 April 2026, a new £2.5 million allowance applies to the combined value of qualifying agricultural and business property eligible for 100% Agricultural or Business Relief. Qualifying value above the allowance receives relief at 50%. Unused allowance can be transferred to a surviving spouse or civil partner. Certain shares traded on recognised exchanges but treated as “not listed”, including AIM shares, are subject to the 50% rate rather than the 100% allowance regime.
For many family businesses the relief remains extremely valuable.
But “the company qualifies for BPR” is no longer the end of the conversation.
We need to know what the business is worth, whether the shares actually qualify, whether there are excepted assets, what other qualifying business or agricultural assets exist, whether lifetime transfers have consumed part of the allowance, what happened on the first death and how the will allocates the business interests.
In other words, the will and the tax computation need to be reviewed together.
And then there is the pension
Marco tells us not to worry about his pension.
“My pension is outside my estate.”
For the moment, that statement may still be broadly relevant to many pension arrangements. But an estate plan being prepared in August 2026 should not stop at today’s position.
Finance Act 2026 has legislated for most unused pension funds and pension death benefits to be brought within the value of an individual’s estate for IHT purposes for deaths occurring on or after 6 April 2027, subject to the statutory exclusions. Death-in-service benefits payable from registered pension schemes are among the amounts excluded from the new regime.
That makes pension wealth much harder to treat as a separate estate-planning compartment.
For some families, an estate which appears comfortably below an IHT threshold today could look very different once substantial pension wealth is included.
The practical message is simple: an IHT review carried out now should model the rules that are about to apply, not only the rules applying on the day of the meeting.
The most expensive will can be the one nobody reviews
None of Marco’s problems arose because somebody sat down intending to create a bad estate plan.
Quite the opposite.
The will may have been entirely sensible when it was prepared.
Then life happened.
The business increased in value.
The London property increased in value.
Another property was inherited in Italy.
His wife spent more time abroad.
The children became adults.
The IHT domicile rules disappeared.
Business Relief changed.
The treatment of pension wealth changed.
Yet the will remained in the drawer.
That is how estate planning becomes obsolete: gradually, then suddenly.
A will should therefore be revisited whenever there is a significant change in wealth, residence, family circumstances, business ownership, property ownership or tax legislation. For internationally mobile families, UK residence history should itself become part of the review.
The question should not simply be:
“Is my will still legally valid?”
It should also be:
“If I died tomorrow, what tax result would this will actually produce?”
Those are very different questions.
Joint ownership can rewrite the plan before the will is even opened
There is another practical point that is often missed.
Not every asset necessarily passes under the will.
How property and investment assets are legally and beneficially owned may determine what happens on death before the executors get anywhere near the residuary clause.
This is particularly important for jointly owned property.
A beautifully drafted will cannot allocate an asset in a particular way if, under the relevant ownership arrangements, that asset passes elsewhere automatically on death.
The tax adviser therefore needs more than a copy of the will.
We normally want to understand the asset schedule, ownership structure, property titles, shareholder arrangements, trusts, lifetime gifts, pension arrangements and the residence histories of the relevant family members.
Otherwise, one is analysing a document rather than an estate.
Can the position be repaired after death?
Sometimes.
But post-death planning should be regarded as a rescue mechanism, not the planning strategy.
One of the most useful tools can be a deed of variation. Broadly, where the statutory conditions are satisfied, beneficiaries can vary the distribution of an estate within two years following the death and elect for the variation to have effect for IHT purposes as though the altered disposition had been made by the deceased. The legislation contains specific requirements, including the written instrument and appropriate statement of intent.
A deed of variation can sometimes improve an IHT outcome, redirect assets, preserve or utilise reliefs, or correct a distribution which no longer suits the family.
But it requires the right people to agree.
There may already be conflicting interests.
The assets may already have moved.
There may be minors or trusts involved.
There may be cross-border consequences.
And the two-year clock does not stop while the family decides what to do.
The best time to find an estate-planning problem is during the client’s lifetime.
The second-best time is immediately after death.
The worst time is when the tax return has been prepared on assumptions which nobody has tested.
Where Vectigalis Tax fits
At Vectigalis Tax, we approach wills and estate planning from the tax side.
We are STEP members, and that matters.
Inheritance tax does not exist in isolation. It sits at the intersection of taxation, trusts, succession, residence, family wealth and estate administration. STEP’s professional discipline is particularly relevant in this area because private-client planning requires an understanding of how those pieces interact rather than treating IHT as a standalone calculation.
Our role is not simply to tell a client what the current nil rate band is.
Nor is it to replace the solicitor or other legal professional responsible for drafting the will.
Our role is to stress-test the tax outcome.
We can review an existing estate structure and ask:
Does the intended spouse exemption actually apply?
Is the residence nil rate band protected?
What happens to overseas assets under the long-term UK residence regime?
Do the trusts still make sense?
How much Business or Agricultural Relief should genuinely be assumed?
What happens after 6 April 2027 when pension wealth may enter the IHT calculation?
Do lifetime gifts, jointly held assets and previous transfers change the answer?
And, for clients with connections to countries such as Italy, does the UK estate analysis fit coherently with the overseas asset and succession position?
Once the tax position is understood, we can work alongside the client’s solicitor, STEP practitioner, notary or overseas professional so that the legal drafting and the tax objectives are properly aligned.
That sequencing is important.
First understand the estate. Then model the tax. Then make sure the documents implement the plan.
The five-minute question worth asking
If your will has been sitting in a drawer for ten years, take it out.
Then ask yourself one question:
Is this document designed for the family, assets and tax rules I have today—or for the person I was when I signed it?
If the answer is the latter, the fact that the will remains legally valid may provide surprisingly little comfort.
The cost of reviewing an estate plan during lifetime is normally modest compared with the cost of discovering after death that an exemption has been lost, a relief does not apply, a foreign asset has unexpectedly entered the UK IHT net, or a trust has produced exactly the opposite tax result from the one the family expected.
A good will tells people where the assets should go.
A good inheritance tax plan goes further.
It makes sure that the route the assets take does not create an avoidable tax bill on the way.
How Vectigalis Tax can help
Vectigalis Tax advises UK and internationally connected individuals, families, entrepreneurs and business owners on the tax aspects of inheritance and succession planning, including UK Inheritance Tax, long-term UK residence, cross-border estates, trusts, Business Relief, lifetime gifting and post-death tax planning.
As STEP members with substantial UK and international tax experience, we can review an existing estate plan from an IHT perspective and work with the client’s legal advisers where amendments to wills, trusts or succession documents are required.
For internationally mobile families in particular, we recommend that the tax position is reviewed before the legal documents are changed. The order matters.
Mail: angelo@vectigalistax.co.uk