group proposes one-stop financial planning
Prudential has released the details of its Inheritance Tax (IHT) trusts as it moves on plans to offer a comprehensive one-stop financial planning service.
The provider has launched three trusts in the past month (International Investment January issue, page 3), which it hopes will cover all elements of IHT planning, and complement its existing trust services.
The Pru has also expanded its client and adviser support material to enhance the trust advice and selection process.
The vehicles include a lifetime nil rate band trust designed for UK-domiciled married clients or civil partners, planning on using both their nil rate bands to mitigate IHT.
Set up by an individual, the settlor remains a lifetime beneficiary and has access to the assets in the whole trust.
Prudential has also launched an excluded property trust, designed for non-domiciled investors living in the UK. This ring-fences offshore investments from UK IHT, even if the client were to later become UK based.
The trust also provides IHT protection for UK-domiciled beneficiaries, however, the assets will not form part of the beneficiaries estates until they are given to them out of the trust.
In addition to its offshore bond discount gift trust, Prudential has also launched an onshore version.
Paul Kennedy, taxation and trusts manager at the group, said Prudential would continue to be innovative as market forces dictated.
He said: "There is a level of momentum driving the market forward, which is why we have dedicated a large degree of resource to offer intermediaries an holistic package for the offshore market."
He noted that, while IHT had traditionally been seen as a tax on a wealthy minority, rising property prices had brought the tax into the mainstream.
This is further backed up by research from Lombard Street Research and Grant Thornton, which found there were an estimated 37,000 estates liable for IHT in the 2005/2006 tax year.
This is a 68% increase in the past five years. It also found that tax collected had grown by 32% in the past two years to £3.3bn.
Kennedy added: "Investing a little time and thought now means people can reduce their tax bill or look to fund the liability. It is important though not to leave it too late because some tax planning solutions need a number of years to maximise their effect."
Nil rate band and excluded property trust launched
Offshore bond DGT now has an onshore bond version
Support material available for intermediaries
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