A couple with four mortgaged rental properties and no wills asked for a second opinion. One trust, on a life policy they already had, reduced the potential inheritance tax on the second death by around £371,000. The fees were £3,410 plus VAT, fixed in writing before any work started.
Names and personal details have been changed. The situation and the figures are real.
The situation
Tom and Claire are in their late forties and early fifties, both employed, with three grown-up children and a grandchild. Over twenty years they built up a family home and four rental properties, two in each name. Every property has a mortgage, and the four rentals are all interest-only.
They had no wills and no powers of attorney. Tom had a life policy of £750,000, taken out to cover the mortgages. It had never been put in trust.
They had already spent two months talking to another adviser. They came to us for a second opinion, wanting to know how much tax their children would face and whether they should start passing the properties on.
What we found
- The life policy was making the problem worse. Outside a trust, the £750,000 payout would land in Tom's estate. That pushed their combined estate over £2m, where the allowance for the family home starts to be withdrawn. One policy was costing them both the payout's own tax and part of their allowances.
- Their debts were larger than their cover. The mortgages totalled around £1.75m against £750,000 of cover. Claire's own policy had quietly lapsed. Without enough cover, their executors could be forced to sell properties to repay lenders.
- A lump sum nobody had mentioned. Claire's employer pension would pay a death grant of around £87,000. If it went to Tom, it would sit in his estate and be taxed on his death. Neither of them knew about it until we asked.
What we recommended
We focused on the steps that would make the biggest difference straight away.
- Wills for both of them, with trusts to protect what passes to their children and keep the family home allowance available.
- Lasting powers of attorney for both, covering finances and health.
- A trust for Tom's life policy, so the payout goes to the trustees, outside both estates.
- Changing how they own their home, from joint tenants to tenants in common, so each half can pass into the trusts in their wills.
We also suggested they review their life cover with their financial adviser, and that Claire check her pension nomination. If her scheme allows, nominating a trust keeps the death grant out of both estates.
What we advised against
Some of what they had heard sounded good but would not have worked for them.
- Putting a rental property into a trust and selling it there. It does not save Capital Gains Tax. If the trustees sell, the whole gain is taxed on them.
- Gifting a mortgaged property into a trust. The mortgage counts as payment, so tax can be due straight away, with stamp duty on top. While the properties are mortgaged, it is the wrong tool.
- Adding their children to the family home now. With a large mortgage still on it, the costs and complications outweigh the benefit. It is worth revisiting once the mortgage is cleared.
- Rebalancing their estates. Once the life policy is in trust, their two estates are already roughly equal. It would have been a fee for nothing.
The numbers
| Before | Life policy in trust | |
|---|---|---|
| Combined estate | £2,355,000 | £1,605,000 |
| Tax-free allowances | £822,500 | £1,000,000 |
| Inheritance tax on the second death | £613,000 | £242,000 |
One trust, on a policy they already had, reduces the potential bill by around £371,000. If Claire's death grant is also directed to a trust, that could save up to a further £34,800.
What it cost
| Mirror wills with trusts for both of them | £1,560 + VAT |
|---|---|
| Lasting powers of attorney, both types, for both of them | £1,100 + VAT |
| Life policy trust, including the deed of assignment | £750 + VAT |
| Changing how they own their home | Included |
| Total | £3,410 + VAT |
The fee was fixed in writing before any work started and paid in four stages as the work progressed, not upfront. The Office of the Public Guardian's registration fees for the powers of attorney (£92 each) were paid separately. Current figures are on the guide prices page.
The takeaway
The biggest saving in this case was not a clever structure. It was a trust on a policy they already owned, and a pension nomination they did not know existed. The ambitious ideas, gifting properties and selling through trusts, would have cost them money while the mortgages were in place.
If you have property, life cover or an employer pension and have never had them looked at together, book a free twenty minute call.
This case study is illustrative. Figures are based on the clients' own estimates and the rules in force in October 2026, assume everything passes to the surviving spouse first, and are not a guarantee of any outcome. Your own position depends on your circumstances. More case studies.
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