By Chris Watts, Private Client Consultant – Fern Wills & LPAs
Last verified: 1 November 2025 (England & Wales)
Proposed changes to Inheritance Tax (IHT) are prompting families to pass on wealth sooner than before.
With pension pots expected to fall under IHT rules from April 2027, many parents and grandparents are accelerating gifts or transferring property early.
Younger generations — often in their 20s and 30s — are now receiving substantial funds or assets earlier than planned, sometimes without understanding the long-term implications.
Before transferring money or property, it’s vital to strike a balance between tax efficiency and security and control.
Passing wealth earlier can save tax — but poor timing can cost far more.
The conversation around inheritance is changing fast. For the over-50s, today’s Budget headlines and shifting IHT rules raise an urgent question: Is it better to give now rather than later?
Early gifts can reduce tax, but when handled without proper planning — or under the wrong type of trust — they can create irreversible problems.
A “Living Trust” sold as a quick fix can lock assets away and create tax problems that outweigh any supposed protection.
Early gifting can legitimately reduce IHT, but it must be balanced against your own future needs.
Transferring large sums or property without professional advice can trigger unwanted tax charges, loss of control, or disputes later on.
Trusts — when chosen and structured correctly — can protect younger or vulnerable beneficiaries.
However, off-the-shelf asset or “living” trusts often fail, leaving clients worse off and sometimes unable to access their own funds.
The right trust protects your family. The wrong one can trap your assets.
Professional guidance ensures your plan is tailored — using potentially exempt transfers (PETs) where appropriate and aligning everything with your Will, LPAs, and wider estate strategy.
A family business owner wanted to pass shares to his children. In the past, he would have retained control until death, but with IHT soon applying to pension assets, he chose to transfer ownership earlier.
Using a discretionary trust, he protected the business value and ensured continuity. His children now share in the growth while he retains safeguards during his lifetime.
A well-timed gift can build family security. An unplanned one can unravel it.
A widowed mother gifted her home into a “living trust” after attending a seminar claiming it would avoid care fees and tax. Years later, she needed to move. The trust prevented a sale without the trustees’ consent — and the arrangement triggered extra legal and valuation costs.
Had she taken regulated advice, she could have achieved the same protection with a Property Life Interest Trust in her Will and still retained control of her home.
Good planning gives freedom; bad planning takes it away.
What is the seven-year inheritance tax rule?
If you give away money, property, or assets and survive for seven years, those gifts usually fall outside your estate for IHT
Why are pension pots affected?
From April 2027, unused pension funds are expected to form part of a person’s taxable estate, potentially subject to up to 40% IHT.
Should I give money away now?
Not automatically. You must ensure you keep enough for your own lifetime needs and understand the tax and legal effects before gifting.
How can I protect money for children or grandchildren?
A properly drafted trust may hold assets securely until the right time, keeping them outside probate and often outside your estate for IHT.
Are younger people really engaging with inheritance planning?
Yes. Advisers report that more clients in their 20s and 30s are seeking help to manage inheritances, invest responsibly, and understand the long-term implications.
Passing wealth is easy. Preserving it takes planning.
Giving early can be smart — but doing it right is smarter.
Before transferring property or savings, review your position, your Will, and your long-term plan. A brief professional conversation can now protect your family’s future and preserve your control.
If you’re already planning lifetime gifts, record them clearly in your Property Log or Executor Preparation Log to maintain transparency and ensure everything is up to date.
