Lifetime Gifts in Wills: Understanding the Benefits and Limitations in England and Wales

Lifetime Gifts in Wills: Understanding the Benefits and Limitations in England and Wales

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The use of lifetime gifts in estate planning can provide an array of anticipated benefits, which include reducing inheritance tax, providing support to beneficiaries during your lifetime, and ensuring your assets are allocated according to your wishes. However, navigating the complexities of gifting during your life and understanding the impact of these gifts on your will and estate plan can be challenging. 

In this comprehensive guide, we will examine the concept of lifetime gifts in wills, the benefits and limitations associated with this strategy, and the crucial factors to consider when making lifetime gifts in England and Wales. Additionally, we will showcase the value of professional will writing and estate planning services like Sovereign Planning in guiding you through the process and ensuring your lifetime gifts are advantageous and compliant with the law.

Forms of Lifetime Gifts and Tax Implications

Gain insight into the different types of lifetime gifts and the potential tax implications for each:

1. Annual Exemption: Individuals can make gifts up to a total value of £3,000 per tax year without any inheritance tax liability. Any unused portion of this annual exemption can be carried forward to the next tax year, but only for one year.

2. Small Gift Exemption: You can make gifts up to £250 per person per tax year without incurring inheritance tax, provided that the recipient has not already received a gift that utilises your annual exemption.

3. Potentially Exempt Transfers (PETs): Larger lifetime gifts can be considered potentially exempt transfers and may be exempt from inheritance tax if you survive for seven years after making the gift. If you pass away within seven years, the gift may be subject to a tapered rate based on the number of years since the gift was made.

4. Gifts out of Income: Regular gifts made from your after-tax income can be exempt from inheritance tax, provided they do not impact your standard of living.

Risks and Limitations of Lifetime Gifting

Consider these potential risks and limitations when making lifetime gifts:

1. Future Financial Needs: When making lifetime gifts, it is essential to take into account your future financial needs and ensure that you retain sufficient assets for your long-term security.

2. Means-Tested Benefits: Gifting assets to beneficiaries receiving means-tested benefits may affect their eligibility. This can result in unintended consequences that must be considered prior to making lifetime gifts.

3. Retaining Control over Assets: If you want to maintain control over the assets you gift, such as property or investments, it may be necessary to establish a trust or outline specific conditions in your will.

Factors to Consider when Making Lifetime Gifts

To ensure a successful and advantageous lifetime gifting strategy, keep the following factors in mind:

1. Tax Planning: Consult a professional will writer or estate planner to discuss tax-efficient strategies, such as using exemptions and reliefs, and incorporating a tailored plan for making lifetime gifts.

2. Proper Documentation: Ensure that all lifetime gifts are appropriately documented and recorded, demonstrating the donor’s intent and facilitating the tracking of gifts for tax purposes.

3. Regular Reviews: Monitor and review your lifetime gifting strategy in accordance with changes in your circumstances, the needs of your beneficiaries, and updates in tax regulations.

The Role of Professional Will Writing and Estate Planning Services

Leverage the expertise of professional will writing and estate planning services to optimise your lifetime gifting strategy:

1. Expert Guidance: Collaborate with experienced professionals who can provide valuable advice on the benefits, risks, and tax implications of making lifetime gifts, ensuring the strategy aligns with your estate planning goals.

2. Tailored Solutions: Work with a professional will writer or estate planner to develop a personalised lifetime gifting strategy that takes into account your unique circumstances, preferences, and tax situation.

3. Legal Compliance: Ensure the legality and compliance of your lifetime gifting strategy by engaging professionals who understand the complexities of inheritance tax rules and estate planning laws.


Incorporating lifetime gifts into your estate planning strategy can offer numerous benefits, such as reducing inheritance tax, providing valuable support to your beneficiaries, and ensuring your assets are distributed according to your desires. To successfully navigate the challenges and complexities surrounding lifetime gifting, it is vital to understand the different forms of gifts, the tax implications, and the potential limitations that could arise. Professional will writing and estate planning services, like Sovereign Planning, can provide invaluable guidance and support, enabling you to make informed decisions about lifetime gifts and integrate them seamlessly into your comprehensive estate plan.

Safeguard your financial legacy and ensure your loved ones benefit from your assets during your lifetime by enlisting the expertise of Sovereign Planning’s professional will writing and estate planning services. Receive personalised advice, tailored solutions, and ongoing support to help you navigate the complexities of lifetime gifting and create a tax-efficient estate plan that protects your legacy for generations to come.

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