Inheritance Tax planning

fugglestick

Hi all

I need to do some inheritance tax planning, but because my estate is tied up in the property I live in, insurance payable on our death, to remove the IT liability to the family seems the best way.

As am 63 NB, have found the Scottish Provident Pegasus Wealth Preservation Plan, whole life.
This give 400K on death of last survivor, guaranteed for 10 year and then revied, on health etc. This may increase premiums.Premium is <500GBP per year, with a return @ 10 years of about 500GBP.

Does anyone have experience of this plan, or any other suggestions?

Thanks

Fuggs

kingstreet

You have two options;-

make gifts to reduce the size of the estate
and
mitigate the liability using life assurance written in trust.

The former is difficult if the estate is mostly property. You can't gift your home, then continue to live in it, as you fall foul of the "gift with reservation" rules.

Gifts also put you in potential conflict with the deprivation of assets rules if council-funded residential care is ever needed.

The latter option puts the money needed to pay the tax in the hands of those who will be responsible for paying it. The trust prevents the payment going into your estate and making the estate even bigger and the liability larger.

The choice of plan will depend normally on the cost. A plan like you describe is susceptible to large increases in premium beyond the initial guaranteed period. An IFA will give you the best possible advice on product selection to deal with this issue.

fugglestick

Yes that's how I saw it, and why I decided on some sacrificial insurance. I have my concerns about SP with the premium review, i.e.what happens if we have a health problem in years to come.
The next best deal to this one was Canada Life Flexible Life Plan. There doesn't appear any premium review with that.

Just found out that cant do the plan with Canada Life as they only deal with IFA's. and I begrudge paying all that commission for completing a few sheets of paper. Recurring commission as well...

kingstreet

Hire an IFA on a fee-only basis, then you get premiums commission-free.

TBH you're better off doing this with advice. There could be more options you haven't considered that save you money. The plan also needs writing in trust and it'd be far better to have the IFA do it than try to take it on alone.

fugglestick

kingstreet wrote: »

Hire an IFA on a fee-only basis, then you get premiums commission-free.

TBH you're better off doing this with advice. There could be more options you haven't considered that save you money. The plan also needs writing in trust and it'd be far better to have the IFA do it than try to take it on alone.

Very valid point. The downside is the guaranteed premiums are in the region of 5/6K per annum as opposed to the 10 year revue of 500ish. Huge difference. Dont think I could afford the 5K, so may do the cheaper one, at least befire the EU Directive in Nov. that will at least give me 10 years to reduce my IT liability. Maybe?