Inheritance Tax

Insurance

A Gift Inter Vivos life assurance policy is designed to cover the potential Inheritance Tax liability that may arise if the donor of a gift dies within seven years of making that gift.

Under current UK tax rules, gifts made during a donor’s lifetime remain part of their estate for up to seven years. If the donor passes away within that timeframe, the gifted assets may be liable for Inheritance Tax.

If the donor survives at least three years after making the gift, any tax due begins to taper down annually until year seven, after which no tax applies. A Gift Inter Vivos policy is structured so that the sum assured decreases in line with this taper relief, ensuring the cover matches the reducing IHT liability.

When written in trust, the policy’s payout can be made directly to the beneficiaries, bypassing probate. This enables quick access to the funds required to cover any tax due on the gifted amount. Because the proceeds are paid outside the donor’s estate, they generally do not add to the estate’s taxable value.

Individuals making significant financial gifts such as property, shares, or large cash sums may wish to ensure that the recipient is not burdened with an unexpected tax bill. A Gift Inter Vivos policy provides peace of mind that any IHT liability can be settled without depleting the value of the gift itself.

For those with property assets they are looking to transfer, we can assist with combined mortgage and protection solutions making use of a concessionary purchase and linked Gift Inter Vivos policy.

At Henry Dannell, we understand that every client’s circumstances are unique, especially when it comes to inheritance tax planning. Our experienced advisers act as facilitators, sourcing and coordinating the most appropriate cover from our extensive and trusted network of specialist providers.

We take the time to fully understand your financial situation, family needs, and legacy goals, crafting a personalised approach that reflects your wider estate planning objectives. We also collaborate closely with your existing advisers, whether wealth managers, family offices, or tax and legal professionals—to ensure any recommended policy is structured appropriately, whether through a trust or as part of a broader strategy.

This hands-on, expert-led guidance helps to reduce potential pitfalls, providing reassurance that your loved ones will benefit from a well-considered, coherent plan.

Assessing the underwriting position before a complex case reaches an insurer 

For private clients with more complex protection requirements, the way a case is prepared and positioned can be as important as the policy itself. 

Medical history, substantial levels of cover, international circumstances, specialist occupations and complex financial arrangements can all influence an insurer’s underwriting approach. Importantly, different insurers may interpret the same circumstances differently. 

At Henry Dannell, our work therefore begins before a formal application is submitted. 

Where medical history is more complex, we seek to understand the position at an early stage, considering the information likely to be relevant to underwriting and how different insurers may approach it. This allows us to assess the potential underwriting landscape before determining where and how the case should be presented. 

For larger or more complex protection requirements, we take the same considered approach to the financial case. We establish the purpose and level of cover, gather the supporting information and ensure the insurer is given the appropriate context to understand the requirement. 

Where appropriate, we may engage with selected insurers before a formal application is made. This can help us understand their likely underwriting approach, identify potential areas requiring further evidence and determine which route is most appropriate for the client’s circumstances. 

We then use that understanding to build the case and position it appropriately, rather than submitting an application without first considering how it is likely to be assessed.

Where clients work with wealth managers, family offices, accountants or solicitors, we can also coordinate with their professional advisers to obtain relevant supporting information and ensure the protection requirement is understood within the wider financial picture. 

The objective is not simply to find an insurer willing to consider the case. It is to understand the underwriting landscape, prepare the evidence and position the application appropriately from the outset.