By Jim Emsley, Founder of ELM Legal Services
Inflation isn’t just something we read about in economic forecasts; it has a direct impact on families, homeowners, and the way we pass on wealth. Over the past couple of years, we’ve seen the cost of living climb, interest rates spike, and financial uncertainty ripple across the country. But one area that’s often overlooked in these discussions is the knock-on effect on estate planning.
As someone who’s worked in legal services for more than two decades, I can say with confidence: in times of economic volatility, planning ahead matters more than ever.
Property Prices and the Inheritance Tax Trap
Rising house prices may feel like a win on paper, but they come with a hidden sting, especially for families who aren’t prepared. Many homeowners have unknowingly crossed the Inheritance Tax (IHT) threshold, simply because of the value of their property. With the current threshold frozen at £325,000 (or £500,000 including the residence nil-rate band), and average UK property prices creeping well above that in many areas, more estates are falling into taxable territory.
In an inflationary climate, assets appear to grow, but so does tax liability, unless safeguards are put in place. That’s why we’re seeing a spike in families turning to trusts, gifting strategies, and careful will drafting to minimise exposure and protect generational wealth.
Higher Mortgage Rates, Less Flexibility
The Bank of England’s rate rises, aimed at curbing inflation, have had a knock-on effect on mortgage repayments. For many, this reduces disposable income and delays decisions about retirement, downsizing, or gifting property to children. What used to be a straightforward estate planning decision like transferring ownership or settling a mortgage before death has become more complex.
We’re also seeing older homeowners using equity release as a way to manage cashflow, which again has implications for the value and structure of their estate. These decisions can’t be made in isolation, they need legal and financial guidance working together.
Volatility Drives Demand for Certainty
One thing’s clear: economic uncertainty is pushing more people to get their affairs in order. At ELM, we’ve noticed a noticeable rise in first-time will writers, particularly among people in their 40s and 50s who are feeling the pressure of both ageing parents and dependent children.
When inflation eats away at savings and pension pots, individuals are more likely to consider how to safeguard what they’ve built, and ensure it’s distributed fairly, tax efficiently, and in line with their wishes.
But estate planning isn’t just about tax. It’s about clarity, legacy, and care. And as volatility continues from inflation to changes in family dynamics, planning becomes a powerful tool for peace of mind.
Estate Planning as Part of Your Financial Toolkit
Good estate planning doesn’t work in isolation from other aspects of financial life. It should be woven into your mortgage decisions, your retirement planning, and your approach to investments.
In a high inflation economy, where future value is hard to predict, professional advice can help you assess your exposure, understand your options, and avoid costly mistakes such as DIY wills that don’t stand up in court or fail to account for complex family needs.
Legal planning also needs to keep pace with life changes, whether that’s marriage, divorce, the birth of a child, or receiving an inheritance yourself. Without regular updates, even the most carefully written will can quickly become outdated.
Final Thoughts
Inflation affects more than our weekly shop or energy bills. It shifts the financial foundations we’ve built our lives upon, including our homes, savings, and legacies. That’s why I believe estate planning is no longer just for the elderly or the wealthy; it’s for everyone who wants to bring a bit of certainty to uncertain times. While inflation may be out of our hands, good planning isn’t.
