Inheritance Law Changes: Is Your Will Ready?

A will can remain valid for many years, but it may no longer do the job you intended. Recent and planned inheritance law changes affect how some estates are taxed, how pensions are treated and when specialist planning may be needed. For families who have worked hard to build a home, savings, business interests or pension funds, reviewing the paperwork is a sensible act of protection, not something to put off.

What do inheritance law changes mean for your family?

“Inheritance law” can describe several different areas. It includes the rules on who inherits if there is no will, the formal requirements for making a valid will, the tax payable on death, and the treatment of trusts, gifts and pensions. A headline about a tax change does not automatically mean that everyone needs a new will. It may, however, expose a gap between your current arrangements and your wider estate plan.

For many people, the most immediate question is simple: will the people you want to protect still receive the right assets, at the right time, and with as little avoidable difficulty as possible? That is particularly relevant if you have remarried, separated, had children or grandchildren, bought property, received an inheritance, or seen the value of your estate grow.

A will is only one part of the picture. Pension nominations, jointly owned property, life insurance policies and trust arrangements can all pass outside the terms of a will. They should be considered together rather than in isolation.

Inheritance tax changes to keep under review

Inheritance Tax is charged at 40% on the part of an estate above available allowances in many cases, although exemptions and reliefs can change the outcome considerably. The nil-rate band has remained at £325,000, while the residence nil-rate band can provide a further allowance of up to £175,000 where a qualifying home passes to direct descendants. These thresholds are currently frozen until April 2030.

That freeze matters because house prices, investments and life insurance payouts can increase the value of an estate even where a family’s circumstances have not changed. The residence nil-rate band is also tapered away for estates worth more than £2 million. A couple may be able to transfer unused allowances between them, but this is not automatic in every circumstance and depends on the facts of the estate.

Planned pension changes from April 2027

The Government has set out plans to bring most unused pension funds and death benefits into the scope of Inheritance Tax from 6 April 2027. The final detail and administration of these rules should be checked carefully as implementation approaches, but the direction of travel is clear: pensions may no longer be treated as outside the Inheritance Tax calculation in the way many families expect.

This does not mean drawing pension funds or making major financial decisions in haste. Pensions have their own tax rules, investment considerations and beneficiary nomination forms. It does mean that anyone relying on a pension as a key part of the family inheritance should review their nominations, will and likely tax position together.

Business and agricultural property

Changes to Agricultural Property Relief and Business Property Relief are also relevant to farming families, business owners and investors with qualifying assets. From April 2026, the availability of full relief is expected to be more restricted for certain valuable qualifying business and agricultural property, with relief above a set allowance potentially available at a reduced rate.

These cases need careful, individual advice. The type of business, the ownership structure, the use of assets and the timing of gifts can all matter. A simple will may not be enough where a family business or farm is involved, and planning based on assumptions can create problems later.

Other inheritance law changes and rules people overlook

Tax changes often receive the attention, but family circumstances can have a more direct effect on who inherits.

If a person dies without a valid will, the intestacy rules decide who receives the estate. An unmarried partner does not automatically inherit under these rules, regardless of how long the couple have lived together. Stepchildren also do not automatically inherit from a stepparent unless they have been legally adopted or provided for in a will.

Marriage usually revokes an existing will unless that will was made specifically in contemplation of the marriage. Divorce does not automatically cancel a will, although the former spouse is generally treated as having died before the person making the will. Separation, by contrast, does not alter a will at all. These distinctions can be surprising at an already difficult time.

A change in health may matter too. A person must have the required mental capacity when making or changing a will. Leaving matters until a serious illness has progressed can make a straightforward update more complicated and can increase the risk of a dispute.

When should you review your will?

There is no need to rewrite a will simply because a Budget has taken place. However, a review is worthwhile after a major life or financial change, and every few years even if nothing obvious has happened.

Consider arranging a review if you have:

• married, divorced, separated or begun living with a new partner

• had a child, grandchild or new dependant

• bought, sold or inherited property

• started, sold or become more involved in a business or farm

• built up significant pension funds, savings, investments or life insurance

• named executors or guardians whose circumstances have changed

The review should look beyond the wording of the will. For example, a gift of a particular property may fail if that property has been sold. A clause dividing the “residue” of an estate may give an unintended result if the estate has changed significantly in value. Likewise, an executor appointed twenty years ago may no longer be willing or able to act.

Wills, trusts and gifts: choosing the right protection

A straightforward will is suitable for many families. It can name executors, appoint guardians for young children and set out who should inherit. Where there are more complex concerns, a trust within a will may offer greater control over how and when assets are used.

For instance, a trust may be considered where a beneficiary is young, financially vulnerable, receiving means-tested benefits, going through relationship difficulties or unable to manage money themselves. It can also be useful in some second-marriage families, where each partner wants to provide security for the survivor while preserving an inheritance for children from an earlier relationship.

There are trade-offs. Trusts bring responsibilities for trustees and can have tax and administration consequences. They should not be used as a standard answer to every concern. The right arrangement depends on the family, the assets and the purpose of the protection.

Lifetime gifts can also reduce an eventual estate, but they are not automatically free of risk. Gifts may have Inheritance Tax implications if the giver dies within seven years, and giving away an asset can reduce financial security or create Capital Gains Tax issues. If someone gives away their home but continues to benefit from it, the intended tax result may not be achieved.

A practical way to prepare for a review

Before a meeting, it helps to gather a clear picture of what you own, how it is owned and who you would like to benefit. Include property, bank accounts, investments, pensions, life policies, business interests and valuable personal belongings. Make a note of any debts, existing wills, trust documents and Lasting Powers of Attorney.

You do not need to arrive with every answer. A good estate planning discussion should identify the areas that need attention, explain the available choices in plain English and leave you clear about the next step. For clients who prefer a personal conversation at home, Langham Wills can help make that process more comfortable and manageable.

The most useful time to review your arrangements is while you are well, informed and able to make decisions without pressure. A carefully considered will and estate plan can spare your family uncertainty later, whatever further inheritance law changes may bring.