Family Law Isn’t Just About Separation – It’s About Preparation. Why Strategic Estate Planning Is One of the Smartest Tools in Your Inheritance Tax Toolkit

Last month, Irwin Mitchell’s Private Client Advisory team published a major new report: The Inheritance Tax Revolution: Regional Insights and What’s Next for UK Estates. Based on a Freedom of Information request to HMRC, the report analyses over 177,000 inheritance tax (IHT) estates across all 121 UK postcode areas. The findings are striking and point to a growing number of families who will be affected by IHT in the coming years.

For family lawyers, this isn’t just data—it’s a call to action. IHT has long been one of the most unpopular taxes, and it’s increasingly catching families by surprise. Traditionally seen as a “private client” issue, IHT is becoming more and more relevant to the work of family law practitioners. Divorce, separation, remarriage, cohabitation and blended families all create complexity – and opportunity – when it comes to IHT planning.

What the Data Tells Us

By 2026/27:

• 9 in 10 UK postcode areas will see more IHT-liable estates.
• IHT receipts are projected to hit £9 billion, up from £5.5 billion in 2021/22.
• Greater London alone could see 9,400 estates liable for IHT – a 43% rise – with an average bill of £275,000.
• 210 postcode areas are expected to see the number of liable estates double.
• From April 2026, full relief on business and agricultural property will be capped at £1 million, with only 50% relief on amounts above that.

This sharp rise is largely due to the long-standing freeze on the IHT nil-rate band (unchanged since 2009 and now extended until 2030), combined with rising property values and upcoming policy changes, including:

• Changes to business and agricultural property relief from April 2026.
• Non-domiciled individuals now being liable for IHT on worldwide assets if UK-resident for 10 of the last 20 years.
• From April 2027, unspent pension funds may fall within the taxable estate.

Why This Matters for Family Lawyers

Family lawyers advising spouses and civil partners – particularly those navigating divorce or dissolution – are uniquely positioned to help clients consider the long-term implications of these changes. Estate planning is no longer optional; it’s essential.

Pre- and Post nuptial Agreements

These agreements are increasingly used not just for asset protection, but also for succession planning and IHT mitigation: For example:

• Clearly identifying non-matrimonial property in an agreement can help safeguard inherited assets and gifts.
• Placing assets into lifetime trusts before marriage or after separation can help remove them from the taxable estate while maintaining control and protecting against marital claims.

Trusts and Lifetime Gifting

Trusts remain a powerful tool for managing IHT exposure, especially when tailored to modern family dynamics:

• Discretionary trusts allow parents to support children and grandchildren flexibly, with potential asset protection benefits. 
• Life interest trusts in wills can provide for a spouse or partner while preserving assets for children or other beneficiaries.

Planning for the Modern Family

Today’s families are more diverse than ever. Clients may be:

• Unmarried but cohabiting
• In second marriages
• Raising children from their spouse/civil partners or partner’s previous relationships

These situations can complicate IHT planning:

• The residence nil-rate band (RNRB) only applies if the estate passes to direct descendants. Stepchildren qualify, but trusts must be carefully drafted to meet the conditions.
• Unmarried partners don’t benefit from the spouse exemption. The “common-law marriage” myth persists but has no legal standing in England & Wales.

The Impact of Separation on a Will

It is also crucial to consider making or updating a will upon separation. For cohabiting (unmarried) couples, separation has no legal impact on an existing will—meaning that unless a new will is made, the former partner may still inherit under its terms. In contrast, divorce or dissolution of a civil partnership does not revoke a will, but the law treats the former spouse or civil partner as having predeceased the testator from the date of the final order. This can lead to unintended consequences if the will is not reviewed. Taking proactive steps—such as drafting a new will and considering the use of trusts—can help ensure that your testamentary intentions are clearly documented and legally enforceable. At Irwin Mitchell, our Wills, Trusts & Estates (WTED) team works closely with our Family Law specialists to provide comprehensive advice tailored to your unique circumstances, ensuring your estate planning aligns with your personal and family goals.

The Value of Integrated Advice

This report reinforces a message we’ve long championed: family law and estate planning should go hand in hand. Clients benefit most when legal professionals collaborate to address family dynamics, tax efficiency and asset protection in a single, cohesive strategy.

At Irwin Mitchell, our Family Law and Private Client teams work together to support clients with:

• Pre- and postnuptial agreements
• Will and trust planning
• Lifetime gifting
• Business succession

Whether your client is separating, remarrying, gifting to children, or cohabiting with a new partner, we can help to ensure their estate reflects their intentions—and avoids unnecessary tax traps.

Inheritance tax is no longer just a concern for the ultra-wealthy. With the nil-rate band frozen and property prices rising, more families are being drawn into the IHT net. Family lawyers are on the front line of these conversations.

By integrating estate planning into family law advice, we can help clients prepare for the future—not just navigate the present.

To read the full report, visit: UK's Inheritance Tax Bill To Reach £9bn by 2027, Predicts New Report

"The increase in Inheritance Tax liabilities across the UK is a significant concern for many families. Our findings highlight the urgent need for individuals to seek professional advice to navigate these changes and plan effectively for the future."”