The majority of today's IHT planning strategies are "outdated" and unsuitable for nine in ten 70-year-olds, according to WAY Group.
The investment management firm says statistics suggest 90% of 70-year-olds will live for the minimum seven years required to qualify for IHT relief, meaning they will not need to take advantage of any discount on their initial gift.
“The standard approach to IHT planning is outdated and belongs to an age when products were extremely basic,” says WAY Group chairman and technical director Paul Wilcox.
“Clearly a discount value to any amount gifted is essential for the ten per cent of 70-year-olds who will not make it through the seven year period before gifts fall out of account.
“But we are more concerned that the vast majority who don't need the discount are not penalised.”
In order to combat this WAY Group has launched the Duo Inheritor Plan which, it says, will deliver a discount on the gift. However, in contrast to a discounted gift plan where funds are ‘locked in’, it also offers flexibility over 60% of the amount gifted.
The product is also linked to a unit trust/open ended investment company (OEIC), not a bond.
“The discounted gift is created by delivering regular monthly drawings for the first eight years in the form of fixed reversions,” Wilcox says.
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