The Conservative Party's proposals to abolish inheritance tax (IHT) would not end trusts and lifetime gifting, says Standard Life.
Last week the party proposed to abolish IHT and replace it with capital gains tax (CGT).
The proposals would raise the seven year period before death for IHT exemption to ten years, which Standard Life says would lead to more gifting through trusts.
Julie Hutchinson, estate planning specialist at Standard Life, says: “Just as now, assets might not be best handed-over directly to younger family members so the use of trusts could continue to be prudent.
"Accountants, lawyers, stockbrokers and financial advisers would all continue to engage clients in discussions about how best to plan for the future and these discussions would cover the transfer of wealth to the next generation under whatever rules prevailed at that time.
"Just as now, lifetime gifts would be part of that landscape.”
The recommendations include the exemption of the primary home.
Hutchinson says: “The exemption for the primary residence on death would be interesting.
"Could it mean that people don’t wish to downsize and release funds so as to protect the more valuable family home from CGT on death?
"The tax tail should not wag the investment dog, but it could well impact on the decision-making for some families.
“A more integrated approach to capital taxation, effectively merging inheritance tax and capital gains tax, might well alleviate some of the current difficulties, but people should not be under any misapprehension that one’s estate on death would suddenly and automatically become tax free under these proposals.”
Last week the Conservative MP John Redwood headed Economic Competitiveness Policy Group (ECPG) published its report looking on equipping the UK for globalisation.
The paper examines energy policy, transport, science, higher education and pensions to taxation.
Earlier this month Standard Life launched an information pack designed to demystify estate planning for IFAs and their clients.
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