Inheritance Tax Planning

SeniorSam

It's really amazing that so many people want to save thousands of pounds in Inheritance Tax and yet want the advice for next to nothing and also don't want to pay ongoing charges.

Inheritance tax mitigation is a skill learned over many years, which can achieve excellent results in the right hands.

So many 'so called' advisers have limited knowledge of Trusts and Wills, let alone investments that can be used efficiently for this, but they still purport to offer sound IHT advice, which is why so many clients may be left high and dry by taking their advice.

Those advisers with little knowledge also may not understand Investment Bonds and the type of funds that need to be selected to achieve growth and not income, which can be important to Trust investments from an ongoing taxation point.

Over many years, I came across many IHT plans that were inadequate, not tax efficient, caused the Trust to require annual tax returns and professionals that should not have been offering advice on IHT matters.

Unfortunately, the FSA only require minimal examination of skills to offer IHT advice and unless individuals are required to pass sufficient qualifications to advise on IHT matters, the problems in this area will continue.

The highest qualification for advice at present is S.T.E.P. which at least ensures that Trust knowledge has reached a reasonable level. However, that knowledge does not necessarily require the qualified person to know about actual Investments and the vast array of funds that can be used within those investments. The STEP person may therefore require and IFA for such advice, but the liaison between the STEP person and the IFA may not necessarily continue to be used.

The only IHT advice worth having, is from someone who has been working in that particular area for many years and specialises in such plans.

That is not easy to find, but they are about and should be worth their charges if you wish to engage them. If you want specialist advice on the cheap ....................... expect to get cheap advice and the problems that will ultimately occur.

Sam

emma3000

Thanks for your insights on the right professional to approach, grey gym sock, CTA and Sam.

Basically, we want to approach someone very knowledgeable and experienced who knows all the IHT minimisation strategies inside out and which ones, in which circumstances are really likely to be accepted by HMRC.

So, a couple of points:

1) Might a STEP-qualified solicitor provide the whole package? Or should we also find a STEP-qualified IHT specialist tax accountant/advisor to work with the solicitor? (We already have an advisor on investments, so we don’t need that too.)

2) How can we tell who is really good / the best out there?

Look forward to your thoughts.
Emma

John_Pierpoint

emma3000 wrote: »

Basically, we want to approach someone very knowledgeable and experienced who knows all the IHT minimisation strategies inside out and which ones, in which circumstances are really likely to be accepted by HMRC.

Hi Emma,

I have three times been in your situation, essentially having to deal with random law created by politician driven statute and the modified by case law; so I needed to find someone with a track record "recommended" by a trustworthy source. This was before internet chat rooms had become an option.

I found one expert by noticing a correspondence in the Financial Times with the address of the correspondents given in full; one was happy to help and gave the the details of his expert [He got me £15k in "compensation", but while he was at it another of his clients got approx £2,000,000 and a mention in The Times].

The other two I found by noting the names of "spokespersons" used by the BBC to give expert commentary.

One advised on the "Landlord & Tenant" relationship and did good work on extracting details of the tenant - The answer was not the one I wanted but for a (then) fee of £600 I at least know the questions to ask and have been able to handle the situation confidently.

The third expert worked for the firm below in the 1990's - the question broadly covered what I would now know at CHC on behalf of a relative. It was set against the background of modest potential IHT, trusts, CGT etc.

The advice was good and the fee £2,000+ with added VAT was not unreasonable. However we parted company some years later when I became the executor. The firm wanted a percentage and was not prepared to work for a fee and just advise on the tax aspect.
Contrary to the firm's opinion, I was able to settle the estate successfully on a DIY basis (perhaps with a little added advice here;)).

I think the best lawyers in the capital are probably making big fees advising the likes of "hedge funds" and the best value for money is likely to be in the provinces.

http://www.luptonfawcett.com/

SeniorSam

Hi Emma,

The only addition that I would make to John's reply, would be, why do you think you don't need another investment adviser. If the adviser you presently have knows about IHT, which no doubt you have asked him and he does'nt, then his advice on any IHT strategy requiring investments my not be sufficient. Try to think 'outside' the box.

STEP solicitors are usually, (not always), good, but unless the good one can confidently recommend and IFA that he/she knows to be good with IHT strategy, then look elsewhere. Nothing wrong in asking the initial question of a STEP lawyer, before you make any appointment, if he can make sound recommendations to specialist IFA to work with, as Lawyers are not allowed to suggest any investments to suit and usually do not know the benefits of certain investments within Trusts and strategies, only how Trusts and Wills work.

Good luck

Sam

CTA_2

emma3000 wrote: »

Thanks for your insights on the right professional to approach, grey gym sock, CTA and Sam.

Basically, we want to approach someone very knowledgeable and experienced who knows all the IHT minimisation strategies inside out and which ones, in which circumstances are really likely to be accepted by HMRC.

So, a couple of points:

1) Might a STEP-qualified solicitor provide the whole package? Or should we also find a STEP-qualified IHT specialist tax accountant/advisor to work with the solicitor? (We already have an advisor on investments, so we don’t need that too.)

2) How can we tell who is really good / the best out there?

Look forward to your thoughts.
Emma

Emma, many practicing IHT specialists in top 20 firms are CTA and STEP qualified. My advice is to use LinkedIn. Its a wonderful tool and will point you in the right direction just by searching the terms CTA STEP IHT.

SeniorSam

Emma,

one final point .................. someone who is qualified, means that they have passed examination and should have reached a certain standard of knowledge. This may be at the level of passing a driving test, when you know that it then takes a few years to know what you are doing. Go for the qualified person, who has operated, since qualification, for a number of years. This should help to ensure that you don't get someone who can easily pass exams, but is not 'worldly wise' when it comes to actually specialising in IHT. A specialist will never mind answering questions about how long they have been helping clients in this particular field.

Sam

emma3000

Thank you Sam, John and CTA for your further thoughts.

In summary, it seems that we should be looking for someone STEP-qualified, who has many years of experience totally focussed on the areas that we need, who is prepared to defer to other experts as necessary. We might find someone who has been used as an expert in the media or someone who is an author in the field, or otherwise by checking on Linkedin. Although some of the best may be found in central London, it seems that they may be far too expensive and thus better value is to be found further afield.

I am tempted to go for a suitable solicitor who seems to be good at IHT as we certainly need a solicitor anyway. If their IHT expertise is ultimately disappointing, then I suppose we would politely suggest we team up with a suitable CTA. Or we also consult an IHT-specialised STEP CTA anyway.

Hope all the above sounds right.

Thanks again,
Emma

getmore4less

emma3000 wrote: »

Hello,

My mother is 76 and she wishes to start planning for IHT. ........

She is worth about £4 million ..............

Emma

It's not just IHT planning(plenty of options provided) it's succession planning to maintain and increase the wealth or plans to spend some of it.

Not everyone is good at managing all types of assets.

This all needs to be done with multiple generation and the long term in mind so you don't end up 76 and in the same position.

CTA_2

emma3000 wrote: »

Thank you Sam, John and CTA for your further thoughts.

In summary, it seems that we should be looking for someone STEP-qualified, who has many years of experience totally focussed on the areas that we need, who is prepared to defer to other experts as necessary. We might find someone who has been used as an expert in the media or someone who is an author in the field, or otherwise by checking on Linkedin. Although some of the best may be found in central London, it seems that they may be far too expensive and thus better value is to be found further afield.

I am tempted to go for a suitable solicitor who seems to be good at IHT as we certainly need a solicitor anyway. If their IHT expertise is ultimately disappointing, then I suppose we would politely suggest we team up with a suitable CTA. Or we also consult an IHT-specialised STEP CTA anyway.

Hope all the above sounds right.

Thanks again,
Emma

Whilst £4m is obviously a large sum of money, in IHT terms (esp central london) this wouldn't command the best advisers.

Plenty of regional firms have ex big 4 london directors etc so don't be afraid to look there.

SeniorSam

Emma,

you may not be aware of the fact that IFA's who specialise in IHT planning, arrange investments within Trusts. You do not need a solicitor to set up a Trust, more to deal with correctly prepared Wills with suitable Trust clauses within.

A true professional will not necessarily charge based on the overall value of the estate. Many have been know to give back part of their commission to the 'pot' in order to retain clients in years ahead.

The really wealthy families in this country have sheltered their assets within family Trusts, which can pass benefits on to the family or whoever. Good luck in your search.

Sam