Bruce Forsyth one of Britain’s leading entertainers and television personalities, was loved by millions.
The host of Strictly Come Dancing, The Generation Game and Play Your Cards Right reportedly left behind £17m in assets when he died in 2017.
However, did Bruce make the right moves when it comes to estate planning?
By leaving everything to his wife, Bruce Forsyth made use of the spousal exemption
According to an article by Mail Online, Bruce reportedly was keen to avoid a large chunk of his estate being swallowed up by inheritance tax,:
“The move is believed to have been designed to thwart the taxman. Money passed from husband to wife is not subject to inheritance tax. Sir Bruce himself once described the levy as ‘a bit over the top’. He added: ‘I think your inheritance should go to your children more than back to the country you’ve lived in.’”
Bruce was a proud father of six children – one son and five daughters – and a further nine grandchildren from his three marriages. He decided, rather than leaving anything to his children, Bruce left £11.5m to Lady Wilnelia Merced his widow, in his Will. In 2019, Lady Wilnelia Merced wound up his business – reportedly worth a further £4.5m.
It would appear it was a smart move, or was it? If he had left money to his children, 40% of the amount exceeding the inheritance tax threshold would go to HRMC …. The Taxman! The tax threshold is £325,000 for a single person.
However, in contrast, there’s an exemption if your estate is passed to a spouse or civil partner. Therefore, Bruce’s widow would have paid no inheritance tax to pay from Bruce’s Estate.
In some newspapers it was reported that Bruce’s widow will distribute Bruce’s assets over time to Bruce’s children. Such gifts like this are called; – “Potentially Exempt Transfers” (PETs) – and will fall out of the estate for inheritance tax purposes if Lady Wilnelia lives for at least seven years.
A risky approach?
Unfortunately, we don’t know anything more about Bruce Forsyth’s Estate and he may have taken other measures that were not reported in the media.
On the face of it, it appears to be a risky approach because if a widow passes away before the seven years were up, the amount of the PET would count within the value of the widow’s estate.
Then consider the possibility of a widow (or widower) not getting on with, or falling out with, children from previous marriages, possibly another headache.
Furthermore, a third scenario. If a widow or widower married again, their previous Will would be rendered null and void. A new Will might be made which could result in cutting out children from previous relationships.
There’s more information about Potentially Exempt Transfers (PETs) on the Money Advice Service website. It says:
“A Potentially Exempt Transfer (PET) enables an individual to make gifts of unlimited value which will become exempt from Inheritance Tax (IHT) if the individual survives for a period of seven years.
If you don’t survive the gift by seven years, the PET becomes a Chargeable Consideration. It is then added to the value of your estate for IHT. If the combined value is more than the IHT threshold, IHT may be due.
Any lifetime transfer that is “Potentially Exempt” must meet certain conditions subject to certain exceptions. The transfer is a gift made by an individual to another individual or to a specified trust. This means, for example, the gift cannot be made from or to a corporation or company.”
So, if you want to guarantee that your children inherit after your death, a Trust – rather than a Will – is the best way of making it happen.
Maplebrook Wills can advise you on all aspects of Wills and Trusts. Call 01392 540 996 today to arrange a FREE consultation and discover the best options for you.