Estate planning isn’t always as straightforward as leaving everything to a spouse or direct descendant.
In fact, many people in the UK are opting to leave some or all of their wealth to their “chosen family”. Research cited by Today’s Wills and Probate (29 January 2026) found that, of those surveyed, 1 in 8 have named a non-blood beneficiary on a life insurance policy, such as:
- Close friends
- An unmarried partner
- An unrelated young person or mentee
- Charities or community causes.
Whether you’re leaving your entire estate to one person or dividing it among multiple, there are many ways you can pass on wealth to protect your chosen family. By carefully planning your estate, you could simultaneously help ensure your beneficiaries receive their intended inheritance and mitigate your estate’s Inheritance Tax (IHT) liability.
Read on to explore four ways you could choose to pass wealth on to your preferred beneficiaries and key things to consider.
1. Name them as a beneficiary in a valid will
Without a valid will, your estate will likely be divided according to the rules of intestacy, which generally sees blood relatives inherit in a rigid priority order. In Scotland, your spouse or civil partner and children would be in line to inherit all or part of your estate first, depending on your circumstances. If no eligible relatives can be found, your estate passes to the Crown.
As such, you might wish to name your chosen family as beneficiaries in your will. This could allow you to leave them any assets you wish, such as cash, investments, your home, or valuable items.
It’s vital to ensure your will is accurate, clear, and up to date. Once you’re no longer able to speak for yourself, an ambiguous or out-of-date will could expose your estate to questions over its validity.
This is particularly important if you have relatives who might try to claim entitlement to your assets after you have passed away. According to MoneyWeek (23 October 2025), in the five years to 2024/25, attempts to have a will ruled as invalid surged by 61%.
Commonly, wills are contested on the grounds that the deceased lacked mental capacity or was pressured into signing over certain assets. In other cases, a will might be found as fraudulent or invalid due to errors such as missing signatures.
A financial planner can help you understand how to divide your assets and refer you to a legal professional if appropriate.
2. Gift assets in your lifetime
To help ensure your chosen family receive a portion of your wealth, you might consider giving financial gifts in your lifetime rather than waiting to pass assets on after you die. This can simultaneously mitigate the risk of disputes and allow your loved ones to benefit from your wealth earlier in life.
Gifting could also help reduce your estate’s IHT liability, meaning a larger portion of your wealth can go to your chosen beneficiaries, rather than to HMRC.
Typically, gifts given more than seven years before your death are excluded from your estate for IHT purposes. Should you die within those seven years, your gifts may be subject to IHT at a tapered rate, depending on your personal circumstances and the total amount gifted.
However, some gifts may be immediately excluded from your estate for IHT purposes. For example, as of 2026/27, the Annual Exemption allows you to give up to £3,000 a year without the gifts counting towards your IHT bill – regardless of when you die.
A financial planner can help you define a plan to make gifts tax-efficiently, while assessing how much you might comfortably give away.
3. Name them as a beneficiary in your pension expression of wishes
In addition to, or instead of, leaving assets to your chosen family via your will, you might opt to name them as the beneficiary of your pension.
You can nominate a person or charity by completing an expression of wishes form through your pension provider. This is typically completed when you first sign up to the pension scheme. However, it’s important to keep your expression of wishes documentation up to date as your relationships and choices change.
While an expression of wishes isn’t legally binding, and pension trustees will ultimately have the final say, documenting where you want any unused pension funds to go can help the trustees fulfil your wishes.
4. Take out life insurance and name them as a beneficiary
As mentioned, 1 in 8 UK adults have named their chosen family as the beneficiary of a life insurance policy, with 1 in 7 believing their non-blood loved ones would be more financially affected by their death than blood relatives.
In some cases, life insurance may offer greater financial protection for your chosen family than the prospect of inheriting your wealth. Assets left in a will, and your pension pot, could reduce throughout the rest of your lifetime – particularly if you need care later in life.
By contrast, provided you continue to pay your premiums up until your death, life insurance might offer your loved ones a lump sum payment when you pass away subject to conditions and exclusions.
If your estate could be liable for IHT, by placing your policy in trust, you may be able to mitigate a potential bill. The options for insurance and trusts are complex, so it’s often worth speaking with your financial planner and a legal professional for help weighing your options before you make any irreversible decisions.
Get estate planning support to help pass wealth to your chosen family
When planning to leave your assets to loved ones, having a comprehensive estate plan can offer invaluable protection to help your chosen beneficiaries receive their intended inheritance. For estate planning support, speak to our financial planners today.
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 Financial Conduct Authority does not regulate estate planning, tax planning, trusts, or will writing.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Note that life insurance and financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.
Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.
Remember that taper relief only applies to gifts in excess of the nil-rate band. It follows that, if no tax is payable on the transfer because it does not exceed the nil-rate band (after cumulation), there can be no relief.
Taper relief does not reduce the value transferred; it reduces the tax payable as a consequence of that transfer.
