Why estate planning conversations with your clients are more important than ever

With a renewed focus on retirement planning from the FCA, you may have already shifted the way you approach your conversations with clients.

If not, now would be a good time to start thinking about making this move. The FCA now expects that retirement advice will be holistic and forward-looking, and this intrinsically encompasses conversations about later-life living options, including Integrated Retirement Communities (IRCs).

Integrated Retirement Communities are an integral part of estate planning as their deferred fee model could reduce Inheritance Tax

Passing on more of their hard-earned wealth to their beneficiaries, rather than the state, is likely to be a priority for your clients. In the Autumn Budget 2025, the chancellor confirmed that the Inheritance Tax (IHT) thresholds, known as the nil-rate bands, will remain frozen until April 2031. This, along with the newly introduced High Value Council Tax Surcharge (HVCTS) on properties valued over £2 million, brings estate planning and later-life planning to the forefront of retirement conversations.

Continuing to freeze the IHT threshold will increase the number of taxpaying estates. Furthermore, the BBC suggests that tens of thousands of properties will be subject to the HVCTS. Without an effective estate planning strategy upfront, your clients – or rather, their families and loved ones – could be facing a much higher than necessary IHT bill in the light of the frozen IHT threshold.

For those with estates which fall into the HVCTS category, there is also a chance they will be paying these higher fees on a property that is now too big for them and possibly unfit for purpose as they grow older.

Effectively, your clients could be facing a time where they are paying a higher level of tax to live in their family home, simply through lack of understanding of their other living options. In turn, this means they could be leaving a large estate when they die, which will be exposed to the full scope of IHT.

Reducing the size of their estate, however, can bring a number of benefits, both in terms of present and potential future taxes, as well as to your clients’ wellbeing and quality of life.

An IRC offers a tactical approach to estate planning, bringing as it does the often-overlooked deferred fee mechanism which could directly reduce the value of your clients’ estates. This fee is generally set at up to 35% of the sale value of the property and is applied after the property is sold, or the resident dies. It is generally used for maintenance, facilities and amenities, staffing, and services.

Crucially, once paid, it is removed entirely from the resident’s estate, reducing the IHT exposure for their beneficiaries.

Protecting your clients’ wealth is beneficial for both them and their loved ones

This can sometimes be a difficult concept for your clients and their families to grasp. At first glance, it seems that a large chunk of money is simply being paid out, which will reduce the amount of inheritance they receive. This is where it’s important that you’re having the right conversations with your clients and their families.

Often, when you explain how the deferred fee model could work to their benefit, they realise the impact that IHT would have on their estate or inheritance, and the value of reducing the estate. You’ll also be fulfilling your obligations to consider your client’s wellbeing and welfare, along with their financial outcomes, in line with the expectations from the FCA.

Essentially, a truly holistic plan must take property wealth and later-life health into consideration. This could be in terms of reducing fees and outgoings for your clients in the present day, while at the same time, introducing them to a new way of life in the vibrant, social, and dynamic setting offered by an IRC.

Or it could be in terms of protecting their wealth and enabling them to pass more of it on to their children, grandchildren, and other loved ones.

Get in touch:

Riverstone Living offers an elevated retirement living experience, with wellbeing and fulfilment at its heart. To find out more, please visit https://www.riverstoneliving.com/advisors or email bruce.ely-johnston@riverstoneliving.com.

Please note:

This article is for general information only and does not constitute advice. All information is correct at the time of writing and is subject to change in the future. The Financial Conduct Authority does not regulate estate planning or tax planning.