Sir Bruce Forsyth’s Estate- Strictly in the Family?

Sir Bruce Forsyth was an entertainer and presenter for more than 70 years. He sadly passed away on 18^th August 2017 at the age of 89 leaving an estate worth around £17 million.

Did Sir Bruce play his cards right?

Sir Bruce left the majority of his estate to his wife Lady Wilnelia Merced under his Will, which also included his company known as Bruce Forsyth Enterprises which was later put into voluntary liquidation in 2019.² Sir Bruce also had 6 children and 9 grandchildren. However, he only left around £100,000 in trust for his 9 grandchildren in equal shares, on the proviso that they each receive their share of the trust when they reach 21 years old.³ 

The Inter-Generational Game

Sir Bruce left the majority of his estate to Lady Wilnelia, which enabled her to take the assets tax free due to spousal exemption. Had Sir Bruce not left the majority of his estate to Lady Wilnelia, it would have meant that his estate would have had incurred a large Inheritance Tax liability. As the majority of his estate was worth over £325,000, this would have resulted in around just over £16.5 million of his estate being taxed at a rate of 40%.

Sir Bruce once said in a Radio Times interview “I think your inheritance should go to your children more than back to your country that you’ve lived in. I’m not saying that you don’t owe the country something, of course you owe your country a lot for living there all those years. But I think it can be a bit over the top.”

However, by Sir Bruce leaving the majority of his estate to Lady Wilnelia, it has resulted in Lady Wilnelia’s own estate being of a high value. In order to assist Lady Wilnelia with lowering her own estate’s value for Inheritance Tax liability purposes, if she wanted to ensure that hers and Sir Bruce’s children receive monies from her own estate during her lifetime in a tax free manner which wouldl assist her in lowering the value of her estate at her date of death. One way in which Lady Wilnelia could achieve this is by way of potentially exempt transfers (PETs). PETs enable her to give family members monetary gifts on a tax free basis provided that she survives those for a period of 7 years from the date on which she initially made these gifts. Alternatively, in the future, Lady Wilnelia will also be able to leave at least £650,000 of her estate tax free, as she will be the second spouse to pass away. In this instance, she is allowed to leave her own £325,000 tax free allowance plus an additional £325,000.

What is the risk of making Potentially Exempt Transfers?

Although potentially exempt transfers enable an individual to give away some/the majority of their estate tax free to friends and loved ones prior to death, there are still some benefits and risks associated with doing this.

The main benefit is that it enables an individual to reduce the value of their estate prior to their date of death, especially if their assets are worth more than £325,000 as Inheritance Tax would have been calculated at a rate of 40% on anything which had been over this amount.

However, the main risk of potentially exempt transfers is ensuring that the individual is going to live for at least 7 years from the date on which they have given away some of their assets. If the individual does not survive for the next 7 years, then the gifts will be subject to Inheritance Tax as part of their estate. However, in this event the Inheritance Tax rate for the gifts will be dependent upon which year the individual has passed away during the 7 years.

Are you concerned about Inheritance Tax? MLP are experts in lifetime planning and Inheritance Tax mitigation.  If you would like to discuss making plans for the future and ensuring that your loved ones benefit from your assets, or, have any worries regarding your existing Will please contact our Wills, Trusts and Probate department who will be delighted to assist you with this and any other future planning needs and requirements which you may have on 0161 926 9969 or by email at wtp@mlplaw.co.uk.