Inheriting ISAs – Making Sure Your Spouse Gets Your Savings

There are many advantages to an Individual Savings Account (ISA). They’re a great savings vehicle, offering tax-free growth for your investments. What so many people fail to realise, though, is that the benefits of an ISA extend beyond just you and your lifetime.

If you didn’t know, upon an account holder’s death, their spouse or civil partner can inherit the ISA allowance through the Additional Permitted Subscription (APS), allowing the tax-free status of the savings to live on long after you’re no longer here.

Dental & Medical Financial Services have been assisting doctors with their financial planning for over 30 years. To learn more about inheriting ISAs and to ensure your spouse gets your savings (or vice versa), read on.

This does not constitute advice and advice should be sought in all instances before acting on it.

Inheriting ISAs

Passing along your ISA to your surviving spouse or civil partner after your death lets the surviving partner receive an additional allowance equal to the value of the deceased person’s ISAs. This allows the spouse to continue their tax-efficient savings without impacting their own ISA allowance.

APS Overview

The Additional Permitted Subscription service is a great way to allow you to save tax-free, but there are rules surrounding the practice, and learning them all could get tricky, but it is crucial to do so to take full advantage. The allowance must be utilised within three years of the death of the account holder or within 180 days of estate administration completion. Keep in mind that there will be some technicalities and time constraints when dealing with the inheritance process, but the potential benefits far outweigh the negatives.
In effect since April 2015, the APS rules are a great opportunity for spouses and civil partners to preserve and grow inherited ISA savings without tax implications. So, even if your ISA assets are not directly inherited by your surviving partner, this allowance ensures that the tax-efficiency of the ISA remains intact.
With the APS, comes flexibility for strategic planning, enabling the surviving spouse to utilise the additional allowance based on the value of the assets held in the deceased’s ISAs, regardless of the beneficiary named in the will. As mentioned, however, timing is critical, since the APS must be claimed within the specified timeframe to make the most of this tax benefit.

APS Rules and Restrictions

Each provider will have their own set of rules and restrictions around APS transfers, so it’s important to check with yours to stay informed. Be sure to research your options and take careful consideration when choosing your provider to ensure a smooth transfer when needed and maximum utilisation of the APS allowance.

Plan with a professional

The APS presents a great opportunity for spouses and civil partners to benefit from inherited tax-free savings. Navigating the complexities of the process can be tough if you go it alone.

Get in touch with your trusted financial adviser to ensure your Estate plan includes a plan for ISA transfers.

Contact Dental & Medical Financial Services today to round out your financial plan today.

Free download Factsheet – Making the most of ISAs