There are several techniques employed to achieve these outcomes and all must be assessed against both criteria.
An outright gifting strategy for instance will attempt to be fully IHT effective after seven years, but will not promote any further growth.
By contrast, a life insurance policy may deliver a large lump sum on the death of the client, but it doesn’t actually reduce their IHT liability, it typically just pays for it. Also, both these techniques offer little flexibility and are effectively irreversible strategies.
By contrast, BR-qualifying investments can reduce the impact of IHT to zero after two years, while also allowing the potential for consistent growth.
For instance, Ingenious Estate Planning Private Real Estate targets long-term growth of 5-7 per cent per annum from an unlisted investment.
Investors stay in control of their money and insurance can be taken out to cover the value of IHT that would be payable on the investment if the investor dies before the two-year qualifying period. The service also comes with complimentary access to a care advisory service.
Comprehensive later life planning is more important than ever
2020 has brought several challenges faced by later life planners into sharp focus.
2021 should herald an opportunity for wealth managers to scrutinise the later life services they offer to see if they really deliver on the outcomes that their clients are after in the light of the future issues they may face.
If there was ever a reason to adapt to changes in the external environment it would be now, before risking losing touch with those who do.
Matt Dickens is a senior business development director at Ingenious
