For high-net-worth families, succession planning is rarely about a single asset.
Wealth may be spread across businesses, residential and investment property, pensions, investment portfolios, cash, trusts and assets held internationally.
The challenge is therefore not simply deciding who inherits what.
A successful succession strategy needs to consider:
how ownership will transfer;
which assets are intended for which beneficiaries;
whether sufficient liquidity will be available;
how existing borrowing and guarantees will be treated;
whether different family members should receive different forms of value; and
whether the current generation retains sufficient flexibility and financial resilience throughout its own lifetime.
Tax will inevitably form part of that discussion.
But it should not be the starting point.
The more useful question is:
What does the family want its wealth to achieve across generations?
Once that is clear, the legal, tax, investment, protection and financing structures can be considered around it.
What is succession planning for high-net-worth families?
Succession planning is the process of preparing for the future ownership, management and transfer of family wealth.
For a straightforward estate, this may largely involve wills and appropriate estate planning.
For a high-net-worth family, there may be considerably more to coordinate.
Consider a family with:
Main residence: £4 million
Investment properties: £3 million
Family business: £5 million
Pensions: £2 million
Investments and cash: £2 million
That represents £16 million of combined wealth before considering liabilities or other interests.
But those assets are not interchangeable.
A family business cannot necessarily be divided as easily as cash.
Property can be valuable but illiquid.
Pensions have their own retirement and succession considerations.
Some assets may carry debt.
Others may have emotional or strategic importance.
The succession plan therefore needs to consider how the whole balance sheet works together, not simply the headline estate value.
Why should succession planning begin with family objectives?
It can be tempting to begin with tax.
Questions such as these often arise first:
How can we reduce the Inheritance Tax liability?
Should we gift assets now?
Should property be transferred?
Should the business be restructured?
Those questions may all become relevant.
But they should follow a more fundamental discussion.
What is the family trying to preserve?
What should be transferred during lifetime?
Which assets should remain intact?
Which beneficiaries are expected to receive particular assets?
Does one child work in the family business while another does not?
Is there a family property that carries particular significance?
How much capital does the current generation need to retain for its own lifetime?
Without clarity on those objectives, it is difficult to know whether any tax or financial strategy is genuinely helpful.
The family objective comes first. The structure follows.
Why does the whole balance sheet matter?
High-net-worth families can encounter problems when different assets are planned independently.
The business may be managed with one set of advisers.
The property portfolio may be financed separately.
Pensions and investments may sit elsewhere.
Wills may have been drafted years earlier.
Life insurance may have been arranged at a different stage of the family’s financial life.
Each arrangement may still make sense on its own.
The problem is that the overall strategy may no longer fit together.
A whole-balance-sheet review can help identify inconsistencies around:
ownership;
beneficiary intentions;
debt;
liquidity;
protection;
tax assumptions; and
the long-term role of each asset.
This is particularly important where values have changed significantly over time.
Ownership, control and value are not the same thing
This distinction is central to sophisticated succession planning.
A family may have several beneficiaries but only one who is involved in a business.
One child may want to retain an investment property while another would prefer cash.
A family home may have emotional importance that makes an immediate sale undesirable.
Simply dividing every asset equally can therefore produce a technically neat but commercially or personally unsuitable outcome.
It can be more useful to separate:
Who should own the asset?
Who should control or manage it?
Who should receive equivalent economic value elsewhere?
These questions can produce very different answers.
Fairness does not necessarily require every beneficiary to receive the same type of asset.
How does Inheritance Tax fit into succession planning?
Inheritance Tax can be a significant consideration for substantial estates.
The eventual liability depends on factors including:
the composition and value of the estate;
available allowances and exemptions;
any relevant reliefs;
liabilities;
previous lifetime transfers;
beneficiaries; and
the legislation applying at the relevant time.
Different assets can also have different tax characteristics.
A qualifying business interest may have a different position from an investment property.
Transfers to a spouse or civil partner can be treated differently from transfers to children.
Pensions require their own consideration, particularly in light of the changes due from April 2027.
The appropriate tax strategy should therefore be established with qualified tax and legal advisers.
A headline percentage applied to total family wealth is not an adequate substitute for understanding the actual estate.
Why is liquidity as important as estate value?
Because a family can be extremely wealthy and still face a shortage of accessible cash.
Consider an estate containing:
Family home: £5 million
Business interests: £6 million
Investment property: £3 million
Liquid investments and cash: £750,000
The gross wealth is substantial.
But much of it sits in assets that may be difficult, undesirable or time-consuming to sell.
If a significant Inheritance Tax liability or other estate cost arises, the executors still need to determine where the money will come from.
This creates an important distinction between:
what the estate is worth;
and
what capital can actually be accessed when it is needed.
For high-net-worth families, succession planning should address both.
Could valuable assets need to be sold?
Potentially.
If sufficient liquidity is not available, executors and beneficiaries may need to consider asset sales.
That may be entirely appropriate where the family already expects to sell.
It becomes more problematic where the asset is:
a family business;
a long-held property;
an investment intended for the next generation; or
another asset the family would prefer to preserve.
Selling under time pressure can also reduce choice.
Advance planning can therefore help identify whether sufficient liquidity already exists or whether other sources may need to be considered.
The objective should not be to preserve every asset at any cost.
It should be to avoid a short-term liquidity requirement unnecessarily dictating a long-term family decision.
Could life insurance support the succession strategy?
Potentially.
Where a future financial requirement has been identified, an appropriately structured life insurance policy may provide capital following death, subject to eligibility, underwriting, policy terms and a valid claim.
For some families, the objective may be to provide liquidity towards an anticipated Inheritance Tax liability.
For others, insurance may help balance inheritances where a significant illiquid asset is intended to pass to one beneficiary.
Business-owning families may also have shareholder protection or key person requirements.
These are different financial needs.
Protection should therefore begin with a defined purpose.
The amount and structure of the cover should follow the requirement, not the other way around.
Does life insurance reduce Inheritance Tax?
Not necessarily.
Its role is often better understood as providing liquidity rather than reducing the underlying tax.
Where a policy is intended for estate planning, ownership and trust arrangements may also be relevant.
Depending on the structure and circumstances, an appropriate trust may potentially help keep policy proceeds separate from the deceased person’s wider estate and may allow trustees to access funds without waiting for the full estate administration process.
Trusts have their own legal and tax implications.
They should therefore be established with appropriate professional advice.
How much liquidity does the family actually need?
This is a more useful question than asking how much insurance or borrowing is available.
The family should first consider what resources are already expected to exist.
These might include:
estate cash;
liquid investment portfolios;
existing life insurance;
planned asset sales;
beneficiary resources; or
other available capital.
Only then does the potential shortfall become clear.
For example, a family may expect a future estate liability of £1 million but already anticipate having £600,000 of appropriate liquidity available.
The planning question may therefore concern the remaining £400,000 rather than the full headline liability.
Plan for the liquidity gap, not simply the estate value.
Should high-net-worth families make lifetime gifts?
Potentially, where doing so supports the wider family strategy.
But the decision should not begin with a desire to remove assets from the estate as quickly as possible.
The donor first needs to establish what they can genuinely afford to give away.
High-net-worth does not mean unlimited financial resilience.
Retirement may last decades.
Investment returns can vary.
Property may require substantial expenditure.
Care needs can arise.
Family circumstances can change.
The donor may also want the flexibility to support different beneficiaries at different times.
A successful succession strategy should therefore consider what should be transferred and what needs to be retained.
How are lifetime gifts treated for Inheritance Tax?
Different gifts can have different tax consequences depending on their nature, timing and circumstances.
The seven-year rule may be relevant to certain lifetime transfers.
Other exemptions may potentially apply.
Some individuals with income materially exceeding their normal expenditure may also wish to consider whether regular gifting from surplus income could be relevant.
These are specialist tax questions.
They should be assessed and documented with appropriately qualified advisers.
The fact that a family has substantial wealth does not make the gifting rules simpler.
Could borrowing provide capital for lifetime gifts?
Potentially, where the decision to gift has already been established as appropriate through wider professional advice.
A high-net-worth individual may have significant wealth but prefer not to sell investments or property to create liquidity.
Property-backed borrowing could potentially provide an alternative source of capital.
But borrowing is not itself an Inheritance Tax strategy.
It creates debt, interest and financial risk.
The tax consequences of the proposed gift and the treatment of the borrowing should therefore be established separately.
The finance should then be assessed on its own merits.
Why might a family borrow rather than sell assets?
There can be legitimate reasons.
A family may want to retain a long-term investment.
Selling property may be unattractive at a particular point in the market.
A business owner may not want to extract capital from an operating company.
An investment portfolio may be intended to remain invested.
A transaction may also require capital more quickly than an orderly sale would allow.
Borrowing can create liquidity without requiring immediate disposal.
But that flexibility has a cost.
Interest, fees, security, duration and repayment strategy all matter.
The relevant question is:
What does the borrowing allow the family to achieve, and is that flexibility worth the cost?
How does property fit into the succession strategy?
Property frequently represents a substantial proportion of high-net-worth family wealth.
This may include:
the main residence;
second homes;
buy-to-let portfolios;
commercial property; and
overseas property.
Each can have different ownership, borrowing and succession considerations.
The family should understand:
who owns each property;
what debt is secured against it;
which beneficiaries are expected to receive it;
whether those beneficiaries want to retain it; and
what happens if several people inherit the same asset.
A valuable property can create both emotional and financial complexity.
What if one beneficiary wants to retain a property?
A beneficiary may need to acquire the interests of other family members.
For a high-value property, that can require significant capital.
Depending on the circumstances, refinancing the property or borrowing against other suitable assets may potentially provide the funds.
The feasibility will depend on:
the property;
the amount required;
the borrower’s income and wider assets;
existing debt;
affordability;
intended use; and
lender appetite at the relevant time.
Legal and tax advice should be obtained before ownership is reorganised.
The financing should then support the agreed structure.
What if one child inherits the family business?
This is a common high-net-worth succession challenge.
A family may have several children but only one who is actively involved in the company.
Leaving the business equally to all of them may not produce the desired commercial outcome.
Leaving the whole company to one child may create a very different value outcome for the others.
The wider estate can potentially help address that.
Other beneficiaries may receive value through:
property;
investments;
pensions;
cash; or
life insurance.
The estate should therefore be considered as a whole rather than attempting to divide every asset equally.
Equal value and equal assets are not necessarily the same objective.
Why does business protection matter?
Where family wealth is concentrated in a private company, an unexpected death can affect both the estate and the business.
Shareholder protection can potentially provide a mechanism and funding for shares to change hands following the death or specified serious illness of an owner.
Key person protection addresses a different risk: the financial impact on the business of losing an important individual.
These arrangements should be reviewed as part of the wider succession strategy.
They should not be treated as isolated insurance products with no connection to ownership, liquidity or business continuity.
How should pensions be considered?
Pensions remain primarily a means of supporting retirement.
But their treatment on death can also affect succession planning.
From 6 April 2027, most unused pension funds and pension death benefits are due to be brought within the scope of Inheritance Tax.
For high-net-worth families with substantial pension wealth, this could materially change the expected estate position.
It may also alter assumptions about which assets should be used first during retirement.
That does not mean individuals should automatically withdraw pension funds before April 2027.
Withdrawals can have their own tax and financial consequences, and capital withdrawn and retained personally may remain within the estate.
Pensions should therefore be considered alongside the rest of the family balance sheet rather than as a separate planning problem.
What about international assets and beneficiaries?
International wealth can make succession considerably more complex.
A family may own overseas property, hold investments in several jurisdictions or have beneficiaries living in different countries.
Different tax and legal systems may apply.
Residence, domicile or other relevant concepts may also affect the position depending on the legislation and circumstances.
Cross-border succession should therefore be reviewed by advisers with appropriate international expertise.
The same applies to financing.
Borrowing against overseas assets or arranging finance for internationally connected beneficiaries can involve very different lender requirements from a straightforward UK transaction.
Should high-net-worth families use trusts?
Potentially, where a trust supports a clearly defined family objective.
But a trust should not be used simply because trusts are associated with sophisticated estate planning.
They can have significant legal, tax and administrative consequences.
The family should first establish what it wants to achieve.
Qualified legal and tax advisers can then determine whether a trust or another structure is appropriate.
The structure should solve a defined planning problem.
Complexity should not be introduced for its own sake.
Existing trusts should be included in the review
A trust established many years ago may now hold substantial assets.
Its trustees, beneficiaries and objectives may also reflect family circumstances that have since changed.
Existing trusts should therefore be considered alongside:
personally owned wealth;
businesses;
property;
pensions;
investments; and
other succession arrangements.
The question is whether the historic structure still supports the family’s current intentions.
Could debt form part of the succession strategy?
Potentially.
High-net-worth families may already use borrowing strategically across property, business and investment assets.
Existing debt should therefore form part of the succession review.
The family should understand:
who owes each facility;
what security supports it;
whether personal guarantees exist;
what happens following death;
what happens following a transfer of ownership; and
how the borrowing is ultimately expected to be repaid.
New borrowing may also form part of an appropriate transaction.
But debt should have a defined purpose.
Increasing leverage simply because it is assumed to improve the Inheritance Tax position is not an appropriate starting point.
Existing borrowing may need as much attention as new finance
A succession strategy can fail because existing debt no longer fits the intended ownership structure.
A mortgage may have been arranged around the current owner.
Commercial finance may rely on their guarantee.
Investment property borrowing may be spread across multiple entities and lenders.
A family business may have debt that assumes the founder remains central to management.
The next generation should not simply inherit assets.
It needs to inherit a workable capital structure.
That may require reviewing existing borrowing before the succession takes place.
What role can later-life lending play?
Later-life lending can potentially provide liquidity where a client’s wider professionally advised strategy requires access to property wealth.
But the starting point should be the objective.
An older high-net-worth borrower may have significant pension, investment, rental or business income.
Potential routes could include:
mainstream residential mortgages;
specialist term lending;
Retirement Interest Only mortgages; or
lifetime mortgages.
The appropriate solution should be assessed against:
affordability;
flexibility;
total cost;
future property plans;
repayment strategy;
estate impact; and
the client’s own long-term resilience.
Age should inform the advice, not predetermine the product.
When might a lifetime mortgage be considered?
A lifetime mortgage may potentially be appropriate where an eligible homeowner wants access to capital from their main residence and the structure suits their wider objectives.
The client may not want or be able to support conventional repayments.
They may also value flexibility over how payments are made.
But a lifetime mortgage creates debt secured against the home.
Where interest is not serviced, it can compound over time and reduce the value ultimately remaining in the estate.
It should therefore be considered alongside all viable alternatives.
A lifetime mortgage should be an outcome of the advice process, not the starting assumption.
Could finance help after death?
Potentially.
An estate may have a temporary liquidity requirement before property can be sold or other capital becomes available.
Where suitable assets exist, specialist property-backed finance may sometimes bridge that gap, subject to the legal position and lender requirements.
For example, short-term finance may be relevant where an estate intends to sell a property but requires capital beforehand.
Alternatively, a beneficiary who wants to retain an inherited property may require longer-term refinancing.
The appropriate finance depends on what the family ultimately intends to do with the asset.
Why does the next generation’s financial position matter?
Succession planning is often approached entirely from the perspective of the current wealth holder.
But beneficiaries’ circumstances can materially affect whether a plan works in practice.
A child inheriting a valuable property may not have the income required to refinance it.
Someone inheriting shares may not want to work in the family company.
A beneficiary living abroad may face different tax or legal considerations.
Another may already have significant personal wealth and very different priorities.
The family therefore needs to consider whether the intended recipients are realistically willing and able to own, manage or finance the assets being passed to them.
Should inheritances always be equal?
That is a family decision rather than a financial rule.
For some families, equal division is fundamental.
For others, fairness may matter more than mathematical equality.
A child who has spent decades building the family business may be treated differently from siblings who have no involvement.
One beneficiary may receive business interests while another receives property or investments.
Protection may provide additional liquidity.
The important point is that the outcome is deliberate, understood and legally documented.
Equality is one possible objective. It is not the only definition of fairness.
Succession planning should also protect the current generation
It is easy for succession planning to become entirely focused on beneficiaries.
That can be a mistake.
The current wealth holders may still require:
decades of retirement income;
significant healthcare or care expenditure;
housing flexibility;
access to emergency capital;
the ability to support family members later; and
sufficient reserves for unexpected events.
A succession strategy that transfers wealth efficiently but leaves the donor financially constrained is not necessarily a successful one.
The plan should therefore balance what is transferred with what is retained.
Why should succession plans be reviewed regularly?
Because high-net-worth estates can change materially over relatively short periods.
Businesses grow or are sold.
Property values move.
New assets are acquired.
Family members marry, divorce, relocate or become more involved in the family business.
Borrowing changes.
Pensions and investments fluctuate.
Tax legislation evolves.
A plan created ten years ago may therefore bear little resemblance to the family position today.
Succession planning should be a continuing process rather than a one-off transaction.
Test the plan against an unexpected event
A succession strategy should not only work if everything happens according to plan.
The family should ask:
What happens if a key family member dies tomorrow?
Who can manage the business?
Who can access information?
What happens to guarantees?
Does the estate have sufficient liquidity?
Would beneficiaries inherit assets they do not want or cannot manage?
Could a significant property or business need to be sold?
Is existing protection sufficient?
This type of scenario testing can reveal weaknesses that are not obvious when planning solely around an expected retirement or future transfer date.
A practical framework for HNW succession planning
A useful review can be structured around seven questions.
1. What does the family own?
Map the assets, ownership structures, trusts, entities, liabilities and guarantees.
2. What does each asset need to do?
Some provide retirement income. Some are intended for succession. Others may eventually be sold.
3. What does the family want to preserve?
Identify businesses, properties or other assets that have genuine strategic or emotional importance.
4. Who should ultimately receive ownership, control and economic value?
Those do not always need to pass together.
5. How much can the current generation comfortably transfer during its lifetime?
Retain sufficient flexibility and resilience.
6. Where will future liquidity come from?
Consider cash, investments, insurance, planned asset sales and, where appropriate, finance.
7. Does the plan still work if events happen earlier than expected?
A strong succession structure should survive unexpected death, incapacity or changes in family circumstances.
Only once these questions are understood should individual transactions or products be selected.
Why coordinated advice matters
High-net-worth succession planning often crosses several professional disciplines.
A tax adviser may establish the consequences of a proposed transfer.
A solicitor may structure wills, ownership, trusts and shareholder agreements.
A financial planner may assess spending requirements and whether lifetime gifts are sustainable.
An investment adviser may consider portfolio implications.
A protection adviser can assess insurance requirements.
A mortgage or commercial finance adviser can consider how property or business assets might support an identified liquidity requirement.
Each solves a different part of the problem.
The strongest strategy is one where all of those pieces support the same family objective.
How Henry Dannell can help
At Henry Dannell Private Clients, we do not provide tax or legal advice and would not determine how a high-net-worth family should distribute assets, structure gifts, use trusts or arrange its affairs for Inheritance Tax purposes.
Those decisions should be considered with appropriately qualified tax, legal, pension, investment and financial planning advisers.
Our role becomes relevant where the wider succession strategy creates a protection or financing requirement.
For families with significant property wealth, that may involve:
raising capital against residential, investment or commercial property;
refinancing existing borrowing;
structuring finance where one beneficiary wants to acquire another’s interest;
considering short-term estate liquidity where there is a credible repayment route; or
reviewing protection where future liquidity has been identified as a concern.
For business-owning families, shareholder protection and commercial finance requirements may also form part of the wider discussion.
Where older clients are considering accessing property wealth, we assess the viable borrowing options rather than treating a lifetime mortgage or equity release as the automatic starting point.
Our starting point is what the family wants the capital or protection to achieve.
From there, we consider affordability, existing debt, available security, flexibility, long-term cost, repayment strategy, assets the family wants to preserve and the financial resilience of both generations.
High-net-worth succession planning is ultimately about more than transferring wealth.
It is about creating a structure that allows ownership, control, liquidity and family intent to remain aligned as wealth moves from one generation to the next.
Important information: This article is for general information only and does not constitute tax, legal, pension, investment or financial planning advice. Tax treatment depends on individual circumstances and the legislation applying at the relevant time. Appropriate professional tax and legal advice should be obtained before making gifts, transferring assets, establishing or changing trusts, or implementing a succession strategy.
Life insurance and business protection are subject to eligibility, underwriting, policy terms and the payment of required premiums. Trust arrangements can have legal and tax implications and appropriate professional advice should be obtained.
A mortgage, commercial mortgage, bridging loan or other property-backed borrowing is secured against property. The property may be repossessed if repayments are not maintained. Short-term finance can be more expensive than conventional borrowing.
A lifetime mortgage is a loan secured against your home. It can reduce the value of your estate and may affect entitlement to means-tested benefits. Interest may be added to the loan and compound over time where it is not paid.