You can take out a life insurance policy to cover your Inheritance Tax liability. You’d need to work out the value of your portfolio and the amount of Inheritance Tax that would be payable on that value, and your policy would be in that amount. You must, however, make sure that your policy is “written in trust” in favour of the executors of your Will. This is for two reasons.
  • if you don’t do this, the policy proceeds will simply be added to the value of your estate when you die, and will only increase the size of your Inheritance Tax bill.
  • it gives your executors instant access to the ready cash they need to pay the Inheritance Tax bill within six months of your death.