Merryn Talks Money What's Eating Away at Inheritance Money
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Mar 25, 2026 Paula Steele, director at John Lamb Hill Oldridge and experienced financial adviser, focuses on estate planning, life insurance and tax-efficient wealth transfer. She discusses balancing care-costs with gifts. She covers pension tax changes, annuities and using gifts, trusts and insurance to protect inheritances. Family dynamics, educating heirs and practical tools for funding tax liabilities are explored.
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Keep A Care Cushion Before Giving Away Wealth
- Do keep enough capital for care because long-term care costs can wipe out intended inheritances.
- Paula Steele warns late-life care often consumes large sums (e.g., multi-year residential care at ~£120k/year), so model and retain a cushion.
Pension Rule Changes Shift Estate Planning
- Changes to pensions reduce their role as an inheritance tax-free third line of defence.
- Paula explains pensions used to be inheritance-tax free wrappers but new rules make them taxable, changing estate planning dynamics.
Strip Pension Income Now And Gift As Surplus
- Do consider withdrawing pension income while alive and gifting surplus income to avoid higher death taxes.
- Paula cites clients drawing pensions, paying 45% now to avoid a higher 67% inheritance tax event later and gifting the surplus.