Almost 85% of advisers believe their clients do not fully understand the implications of inheritance tax (IHT), according to research by Close Investments.
A survey of almost 200 IFAs shows just 3% of clients raise the topic of IHT with their advisers.
The research found 95% of advisers believe clients need more IHT education as an increasing number of people find the total value of their assets brings them within the tax’s scope.
Robert Meyer, assistant director of specialist sales at Close Investments, says many clients behave reactively rather than proactively and says increased advertising and news coverage would help raise consumers’ awareness of IHT.
He says: “Traditionally advice on IHT has sat with private wealth managers, specialist tax advisers and experienced specialist solicitors. With the explosion in the numbers of people affected by inheritance tax there is a need for broader advice and new avenues of enquiry.
"The traditional trust fund approach is not necessarily appropriate for someone whose greatest asset is their detached four bedroom house in Surrey.
“After a period of sustained economic growth, the government seems content to allow the nil rate band increases to trail behind the increasing value of individuals’ assets.
"The challenge is for us in the financial and professional advice community to make sure our clients understand just how much will disappear into government coffers at their deaths and how following the advice available and taking often simple steps can benefit their families greatly.”
The survey also shows 54% of IFAs’ clients seek IHT guidance on all their assets, not just their homes.
Meyer says: “It’s not unusual in this world today for clients to have a couple of hundred thousand in ISAs alone. Add to that their shareholdings, other assets such as investment bonds, holiday homes and their house in the south-east, only worth £500,000 to £600,000, that puts clients in the one to two million value age.”
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