With the sad death of Prince Philip the Royal Family will now have to deal with the administration of his estate. His net worth is not a matter of public record but estimates range from £10 million upwards.
As with all married couples if the Prince has left his entire estate to the Queen, his spouse, then this will pass free of Inheritance Tax. If he has left any part of his estate to any of his children, then this will also be subject to tax in the same way as if you or I had left part of our estate to our children. One exemption that the Royal Family enjoy in relation to Inheritance Tax that is not available to the rest of the population is that any part of the estate which passes on the death of the monarch to their successor is exempt for the purposes of Inheritance Tax.
If Prince Philip had taken advice about the distribution of his estate and Inheritance Tax he would no doubt been advised that the most sensible plan would be to leave everything to the Queen with the result that no Inheritance Tax would be payable on his estate. If on her death the Queen leaves her entire estate to Prince Charles in her Will due to that special exemption again no Inheritance Tax would be payable. However this does lead to a dilemma that some families find themselves in – will the other children be happy if they do not receive any inheritance from their parents?
Now whilst most of us don’t have the same level of wealth as the royal family and we certainly don’t benefit from the right to leave our entire estate to our first-born child free of tax we really should all take a moment to think about Inheritance Tax. When you take into account that the Inheritance Tax threshold has now been frozen until 2026 and that house prices seem set to continue rising together with the fact that some of the current generation of pensioners are benefiting from generous final salary pension schemes it would appear that the levels of Inheritance Tax paid will increase year on year.
There are ways to reduce the amount of tax that would have to be paid on your death by careful planning during your lifetime and by drawing up a tax efficient Will. Doesn’t it make sense to take advice now to make sure as much of your estate can pass to your family rather than to the Chancellor?
