Inheritance Tax: Save £100,000s with simple advanced planning Article Discussion

EdInvestor

tenuissent wrote: »

I can only say we've come to trust them, after going to a couple of public presentations and having face to face long discussions with many questions from us about what is in it for them, and what could go wrong.

We are financially fairly naive, so this is not much of a recommendation, but we think the figures add up, and we are confident that they will continue to answer questions that arise in the future, and give us peace of mind.

This may not be the cheapest way to make IHT arrangements, but confidence and peace of mind are worth paying for, we think.

But have you consulted any other independent advisor (Salesmen for SJP are not independent).

Jem's comments are absolutely spot on.

In any case if you are talking about 100k,you presumably don't have to bother any more because of the new rules

jem16

Tiggs wrote: »

ohhhh...too many questions

I'm not so sure that the example of a good tied agent is a rare one - i worked as a tied agent for a few life companies when i started and met many good advisers who were far removed from the stereo type....i never met many unscrupulous advisers until i went IFA! I found too many rested on their "status" and felt that they could get away with lower quality of customer services. I was told a few times "dont bother with doing all that work for your clients...you dont need to now you're an IFA"

Perhaps the planned review on qualifications will weed out those bad ones.

SJP charges - bit more expensive than average probably sums it up.

I did find mention of those charges on the other thread I linked to. You said that it was 3.5% initial commission and 0.5% trail. As the FSA quote the average commission by IFAs as 1.8% that's almost double. It's also 3.5 times more expensive than my own IFA charges on initial commission.

Much as I liked your car salesman analogy I cannot justify spending three and a half times the amount for a more limited choice.

When i was tied to FP many years ago i used to believe that my ADVICE was as good as any IFAs, only my selection of companies to enact that advice was limited. When i turned IFA i found that was true - my advice was the same, i could just pick from a wider range......but in the long run is standard life better than NU...or AXA better than Scot Eq?

The advice matters a lot. However it's going to fall down a lot if the products to choose from are more limited. I don't see many of SJP's funds amongst the top performers.

tenuissent

My goodness, their charges, from immediate and possibly unreliable memory, start with 0.xx, no whole figures. Eg 0.25%, nothing like 7.5%

I wil look up my notes tomorrow and report back.

Tiggs_2

EdInvestor wrote: »

In any case if you are talking about 100k,you presumably don't have to bother any more because of the new rules

says it all really.

free advice says dont need to bother anymore.......aboout as reliable as a free Vauxhall.

tenuissent

Edinvestor, the £100k is outside the £600k nil rate band, that's why we have to set up a Trust - otherwise our 6 offspring would have to find c£40,000 for tax BEFORE receiving the cash to share between them.

What the new rules mean is that we don't any longer have to set up complex wills to benefit from two sets of £300k nil rate band, which we were a week away from doing.

harryhound

Oh dear this thread has turned into "How to manage a Trust".

As someone who had to manage a trust that consisted of a house (free to the aged increasingly confused beneficiary) plus minimal income, devalued during 35 years inflation from the 1960's until the 1990's. I can offer the following thought:
Looking after old people and administering finance on their behalf, especially from fancy business accommodation is EXPENSIVE.
If it is done outside of the family, someone has to pay these costs.

How to administer a trust depends on the objectives of that trust.

jem16

tenuissent wrote: »

My goodness, their charges, from immediate and possibly unreliable memory, start with 0.xx, no whole figures. Eg 0.25%, nothing like 7.5%

I wil look up my notes tomorrow and report back.

I would imagine that the 0.xx figure is the ongoing trail commission. However the important figure may be the initial commission. Plus of course the actual annual management charges - is the trail commission coming from those or on top of those?

Edinvestor, the £100k is outside the £600k nil rate band, that's why we have to set up a Trust - otherwise our 6 offspring would have to find c£40,000 for tax BEFORE receiving the cash to share between them.

What the new rules mean is that we don't any longer have to set up complex wills to benefit from two sets of £300k nil rate band, which we were a week away from doing.

How will it work if you are using a third of your allowance now in setting up the trust? Will that not mean that instead of having £600k ( 2 x £300k ) you will only have £500k ( 1 x £300k and 0.66 x £300k) at 2nd death?

EDIT - or are you setting it up now so that hopefully it doesn't count on 1st death?

jem16

Tiggs wrote: »

says it all really.

free advice says dont need to bother anymore.......aboout as reliable as a free Vauxhall.

Ed may actually be correct in this case Tiggs.

tenuissent wrote: »

Edinvestor, the £100k is outside the £600k nil rate band, that's why we have to set up a Trust - otherwise our 6 offspring would have to find c£40,000 for tax BEFORE receiving the cash to share between them.

It sounds like tenuissent is only £100k outside the £600k nil rate band. As this will be rising to £700k in 2010 this would take them back inside.

Tenuissent has also mentioned in previous posts about preferring to keep control of her savings as most of the value of the estate is in the house. If the £100k represents most of her savings I would keep control of it if it was me.

I had a similar decision to make about 18 months ago as to whether or not to put my £100k investment bond into trust for my sons to mitigate IHT. As a widow I only had £300k free of IHT and with my late husband's pension scheme lump sum and increasing value of my house suddenly found myself having to worry about IHT that had never been a concern before my husband's accident. However I decided that I wanted to keep control and so glad that I did. With the new rules I'm now outwith the IHT threshold.

Tiggs_2

jem16 wrote: »

Ed may actually be correct in this case Tiggs.

Even a vauxhall will start sometimes.

There are many more issues to know and consider before suggesting it is not required.

I have to say, am glad to be beyond these issue now. Incredible how quickly an advice issues turns into a costs issue. It's nice to be able to give advice without worrying about the client saying how they have found the same product for .25% cheaper and will i match etc, etc. Fair play to those that still work that way, i appreciate there is a large demand for that approach.

jem16

Tiggs wrote: »

Even a vauxhall will start sometimes.

Excuse me - my Vauxhalls have always started.

There are many more issues to know and consider before suggesting it is not required.

That is true. However it should be considered.

I have to say, am glad to be beyond these issue now. Incredible how quickly an advice issues turns into a costs issue. It's nice to be able to give advice without worrying about the client saying how they have found the same product for .25% cheaper and will i match etc, etc. Fair play to those that still work that way, i appreciate there is a large demand for that approach.

Your clients seem to be in the high wealth area so perhaps don't mind either way.

Whilst I value good advice and will gladly pay for it as opposed to going DIY, I see no reason to pay over the odds either. If the 3.5% initial commission is correct, it's an awful lot more than just 0.25% extra.

Plus you have to consider that if better funds are available through the IFA then that is going to have an effect on the overall performance.