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Premium Bond Winners - Case Study

Updated: Apr 11

The two recipients of this month’s NS&I Premium Bonds £1m Jackpot live in the West Midlands and in West Sussex; and I am reminded of an unusual situation a few years ago when a lady who won the jackpot 2 weeks after she had died!

Long story short, but we managed to stop the sons paying £400,000 to HMRC in inheritance tax (IHT) on their mother’s £1m jackpot.

Their local high street solicitor was about to submit the IHT400 to HMRC as a precursor to obtaining grant of probate. However, we spotted that the £1m prize had been included in the taxable value of her estate, which had increased the IHT due by c£400,000. So, we intervened and pointed out that the value of the taxable estate is the value immediately prior to the date of death (s4 Inheritance Tax Act 1984) and on the day she died, she owned £30,000 in Premium Bonds and her estate did not receive the £1m until the official date of announcement of 1st of the month, which was a few days after she died.

As a side note, it is not commonly known that the prize numbers are generated by ERNIE about two weeks before the announcement day to allow time for the draw to be audited.

Nevertheless, the official prize date is always the 1st of the next month.

Although this is a rare set of circumstances, it does shine a light on the fact that professional advice, delivered by suitably qualified advisers, who are willing to collaborate, is always good value for money.

We get nervous when a client says they have asked the local high street solicitor who dealt with their house purchase and not used to dealing with private client matters, to “…get grant of probate” for them or, even worse that they have decided to do it themselves.

Although we have a full STEP member and dually qualified as a registered trust and estate practitioner in the team, we do not write wills, LPAs and trust deeds; and we don’t deal with probate. We are very focussed on using our skills and knowledge as chartered financial planners, helping families with complex and often vulnerable circumstances, to answer their ‘5 big questions’ -   

So, as this deceased lady’s situation highlights, the best outcomes for clients are achieved through a collaborative approach with a suitably qualified legal professional. The two sons had appointed a solicitor, but he was a generalist and unfortunately did not specialise in private client work. To put the sons on the right track and save them £400,000 that wasn’t in fact due, we introduced them to a firm that we knew would be a safe pair of hands and recognised the value of a collaborative approach.

So, if you want to discuss how we might assist through a collaborative approach to financial and estate planning, please get in touch

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