To read the trade press over the last few weeks, it would be surprising if one did not come to the conclusion that the inheritance tax planning market is now back into full swing.
Everywhere you turn there is one spokesperson or another doing their best to calm the fears of financial advisers with explanations of the new regime and helpful tips on how to get around the problems of chargeable lifetime transfer taxation. These efforts are laudable, but there is a risk that advisers are giving the false impression we are in a similar position to that which existed pre-Budget.
Before the Budget, there was a view in some quarters that advisers were being encouraged by providers to promote the benefits of discounted gift trusts (DGTs) above other forms of IHT planning. There is a saying “if the only tool you have is a hammer then pretty soon every problem starts to look like a nail”. Discounted gift trusts were and are very useful tools in IHT planning for some clients, but they are not the only solution available. In the rush to explain the ways in which DGTs can still be used, there is a risk that this will over-emphasise their place in the IHT planning toolbox.
It is my belief that IHT planning offers advisers a real opportunity to add value to their clients and to establish themselves as offering truly independent advice. Such advice merits a fee-charging model and there is plenty of scope to demonstrate the added value that this advice brings to the client.
However, advisers will be required to offer a full range of solutions and not just a product sale. The use of exemptions, outright gifts, protection products, gift and loan arrangements, will planning as well as other IHT vehicles will be required. This may mean an investment of time and effort, but with the size of the potential market for IHT planning set to grow and with unprecedented levels of press coverage, the investment will undoubtedly be a profitable one.
Richard Leeson is international relationship manager at Prudential.
The views expressed are those of the author and not those of the company he represents.IFAonline
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