Misselling of "long term care" bonds

EdInvestor

Guardian

Ombudsman finds in favour of a pensioner who was sold a bond which she was told would pay the costs of long-term care.

EdInvestor

Sunday Times

Also be careful of anyone trying to flog you an investment bond set up as a "discounted gift trust" where you can take an income but avoid inheritance tax on the capital.

The tax man has now ruled against these.

[Note that estates valued at 285k (300k from April) or less per person are free of inheritance tax.]

dunstonh

EdInvestor wrote:

Guardian

Ombudsman finds in favour of a pensioner who was sold a bond which she was told would pay the costs of long-term care.

The article contains a number of mistakes and the mis-sale had nothing to do with long term care coverage but attitude to investment risk not matching.

I suggest you edit the title of this thread Ed so you dont mislead people.

As a side note, Sesame did successfully appeal against an FOS decision last year on the basis that in the 90s with profits were lower risk in nature than they are now. I wouldnt be surprised if they appeal again as there is similarity with this case.

DavidLaGuardia

EdInvestor wrote:

Also be careful of anyone trying to flog you an investment bond set up as a "discounted gift trust" where you can take an income but avoid inheritance tax on the capital.

The tax man has now ruled against these.

[Note that estates valued at 285k (300k from April) or less per person are free of inheritance tax.]

What a lot of bovine skeses. The tax man HAS NOT ruled against them

HMRC has picked up on older people in excess of 90 year old when the underwriting of life expectancy becomes a little bit ridiculous (although the article pointsout that it is unfair on those older people who previously set up schemes when it was acceptable).
Also, unless a Bare Trust is used larger gifts may attract tax on entry and at 10 year intervals to the extent they exceed the nil rate band (currently £285,000) Hence a couple, each under 90 year old, can still put in excess of £500,000 between them before any changes in rules become a practical issue and even when the issue arrises, the Discouinted Scheme may still offer an appropriate solution.