Latimer Hinks has advised that a legitimate tax planning strategy used by former Labour Minister Tony Benn could help thousands of families worried about Inheritance Tax.
The former Labour minister left an estate worth £5m to his children, and official documents suggest he used legitimate tax planning strategies to reduce death duties.
As an owner of high end properties in London and the South of England, it seemed certain after his death in March this year that his family would face a large inheritance tax bill. Now, publication of the details of his will coupled with records held by the Land Registry suggest he took practical steps more than a decade ago to reduce the impact of this tax on his heirs.
After the death of his wife in 2000, the couple's children appear to have taken on part ownership of the family home, a valuable property in Holland Park, West London. This course is particularly usual when the surviving spouse continues to live on in the property. Mr Benn eventually sold the house only in 2011.
Andrew Way, a Partner at Latimer Hinks, said: "The newly published documents confirm that, as suspected, tax planning had taken place to ensure the children inherited directly from their mother, as opposed to the more typical course of events where the first spouse to die leaves everything to the other, who in turn bequeaths everything to the children on his or her own death. The sorts of arrangements described here are generally viewed as practical steps taken as part of wider tax planning and tax efficiency.
"Measures such as these should not be viewed as being made for the purpose of tax avoidance, rather sensible tax planning after specialist advice has been obtained. The blurring of the distinction between honest, and sensible, practical steps and actual dishonest tax avoidance strategies is becoming all too commonplace. Measures such as these are simply tax efficient.
He added: "As an alternative to outright gifts to sons or daughters, the use of trusts should be considered. Trusts can provide the benefits and advantages of protecting family wealth in the case of childrens divorce, bankruptcy, early death or perhaps when an intended beneficiary is vulnerable or lacks maturity to manage their own affairs.