Millions, £100,000s, nothing? How much should you leave to your beneficiaries?
Wanting to ensure your wealth continues to support your loved ones after you’re gone is one of the main financial planning concerns for many people.
However, the best legacy plans often aren’t as simple as deciding on an arbitrary number and ensuring that amount is left in your estate. Instead, they typically look at the long-term goals of you and your loved ones and consider how financial planning strategies can help support them, both now and after you die.
Working out how much you can and should pass on to your beneficiaries isn’t always easy, and it often takes open, honest conversations alongside careful planning and preparation. By taking action now, you can help ensure your legacy reflects your wishes and that your loved ones are properly supported in the future.
Read on to find out how you can decide what to leave to your beneficiaries.
It’s important not to compromise your needs in the service of your legacy
Whatever your intentions are for your legacy, you should never compromise your own financial security.
While it can be tempting to set aside money for loved ones early on, your circumstances can change and so can your needs. If you put money in a trust or gift it while you’re still living, you may be left short later.
So, it’s important to understand and plan for your own long-term security, which might include funding your retirement, covering unexpected costs, or planning for potential social care for you or your partner.
Over time, you may find your money stretches further than you thought, meaning you could increase what you leave behind. But begin by making sure your own essential and future expenses are fully accounted for before deciding what you can comfortably pass on.
A financial planner can use cashflow modelling to help you project how your financial needs may evolve and what this would mean for your wealth and legacy plans.
How you distribute your estate can improve its tax efficiency
How you choose to distribute your assets and who they go to can make a significant difference to the amount of Inheritance Tax (IHT) your estate will be liable for. So, when deciding how and what to leave and who to leave it to, it’s important to understand the tax implications.
In 2026/27, the standard IHT allowances are:
£325,000 for the nil-rate band – This is available to everyone.
£175,000 for the residence nil-rate band (RNRB) – This is an additional allowance if you leave your main home to direct descendants, though it tapers on estates worth over £2 million.
Spousal exemption – Anything left to a spouse or civil partner is typically exempt from IHT, and any unused nil-rate band or residence nil-rate band can usually be transferred to the surviving partner.
So, with careful planning, you and your partner may be able to pass on up to £1 million free from IHT, provided you distribute your estate efficiently. Anything above these thresholds will typically be liable for 40% IHT.
Beyond these allowances, the type of assets you leave behind can also improve the efficiency of your estate. For example, assets that qualify for Business Relief (BR) or Agricultural Relief (AR) can receive up to 100% IHT relief. Moreover, assets placed into trust can fall outside the taxable estate, provided certain conditions are met.
You can read more about how BR works in our previous article on the topic.
You also don’t have to wait until death to pass wealth on to your beneficiaries. Lifetime gifting can be an effective way to support loved ones earlier, while also helping to reduce the overall value of your estate for IHT purposes.
Gifting can also be particularly useful when transferring assets with personal value. For example, if you know a child has always had a strong attachment to a piece of jewellery, gifting it during your lifetime allows them to have it without worrying it could be subject to IHT, provided it falls within the relevant allowances.
You can read more about gifting allowances and how they can fit into your estate plan in our previous article on the topic.
Given the complexity of IHT and estate planning rules, it’s important to work with a financial planner to decide how to distribute your estate and what strategies you can use to improve its efficiency.
Knowing your beneficiaries’ goals can help improve the effectiveness of your estate plan
Once you have accounted for your own needs and ensured you understand the various allowances and reliefs available to you, you need to consider the individual goals and circumstances of your beneficiaries.
For instance, if you have a beneficiary with young children, they may face future costs, such as school fees or university expenses, which may affect what you leave them and whether you put it in trust or another arrangement.
Similarly, you may have a loved one who runs a small business, and you might choose to leave them additional support to help them through challenges your employed beneficiaries are less likely to face.
You might also decide to pass wealth directly to your grandchildren or provide extra funds for a vulnerable beneficiary who requires ongoing assistance.
These decisions are not necessarily about dividing your estate equally, but rather about ensuring your wealth has the most effective impact for the people you care about.
In some circumstances, if your family are already secure, you may also want to leave a larger portion of your estate to charity. This can have tax benefits, as if you leave at least 10% of your net estate to charity, the IHT rate on the rest of your estate reduces from 40% to 36%.
There is no single answer for how much you should leave to your beneficiaries. The “right” amount will depend on your own financial situation and the goals of your loved ones. But whatever your plans are, it’s important to have open and honest conversations to help reduce uncertainty and ensure your intentions are clear.
A financial planner can help you determine how to distribute your estate
We can help you understand how much you need to ensure your own stability and how you should then plan to help your loved ones after you’re gone.
We will work with you to find out your potential future liability, then use cashflow forecasting so you can see how any IHT mitigation strategies could affect your financial security going forward. We can then recommend strategies for how to distribute your estate according to your needs and wishes, as well as those of your beneficiaries.
Finally, we can conduct regular reviews to ensure your estate plan remains up to date and effective.
To speak to a financial planner, get in touch.
Email info@mlpwealth.co.uk or call us on 020 8296 1799.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.