Estate Planning for Single Parents: Case Study

How Emma, a single parent, structured her estate to provide for her children while minimizing inheritance tax.

Case StudyLast updated: February 2026Reading time: 10 min

Note: This is a hypothetical scenario created for educational purposes only. The names, situations, and outcomes are fictional examples designed to illustrate IHT planning concepts. Always consult with FCA-regulated financial advisers and qualified tax professionals for advice specific to your circumstances.

The Situation

Emma (52) is a divorced single parent with two children aged 15 and 18. Her estate includes:

  • Main residence: £450,000
  • Savings and investments: £180,000
  • Life insurance: £200,000
  • Pension: £120,000
  • Personal assets: £30,000

Total estate value: £980,000

Initial Concerns

Emma was worried about:

  • Her children inheriting too young and not managing money well
  • Potential inheritance tax liability as her estate grows
  • Ensuring both children are treated fairly
  • Protecting assets if she remarries

Planning Strategy

Emma worked with an estate planner to implement:

  1. Will with protective trust: Created a will leaving assets in trust for children until age 25
  2. Life insurance in trust: Moved £200,000 life insurance into trust, keeping it outside the estate
  3. Pension beneficiaries: Named children as pension beneficiaries (£120,000 outside estate)
  4. Regular gifting plan: Started making gifts to children using annual exemptions
  5. Property planning: Ensured main residence qualifies for RNRB by leaving to children
IHT Calculation

Before planning:

  • Estate value: £980,000
  • Nil-rate band: £325,000
  • RNRB: £175,000
  • Total allowances: £500,000
  • Taxable estate: £480,000
  • IHT due: £192,000

After planning:

  • Estate value: £660,000 (excluding pension and life insurance in trust)
  • Total allowances: £500,000
  • Taxable estate: £160,000
  • IHT due: £64,000
  • Tax saved: £128,000

Additional Benefits

  • Children's inheritance protected in trust until they're mature enough
  • Life insurance proceeds paid quickly outside probate
  • Pension death benefits potentially tax-free if Emma dies before 75
  • Assets protected from future relationship complications
  • Ongoing gifting strategy to further reduce estate

Key Takeaways

  • Single parents need to plan carefully for guardianship and asset protection
  • Trusts can protect inheritances for young beneficiaries
  • Life insurance and pensions can be kept outside the estate with proper planning
  • The RNRB is available to single parents leaving property to children
  • Regular reviews are important as circumstances change

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