Care Home Fees and Deliberate Deprivation

EdInvestor

Liz_the_Whizz wrote: »

an investment bond is disregarded as it is classed as a life insurance policy - is this correct?

Yes.Quite ridiculous, as the life insurance is only a fig leaf: it's a sop to the insurance companies really, one of the tax dodges they rely on to do business - the life policy aspect means it can be written in trust and not be counted in the estate for IHT.

dunstonh

Yes.Quite ridiculous, as the life insurance is only a fig leaf: it's a sop to the insurance companies really, one of the tax dodges they rely on to do business - the life policy aspect means it can be written in trust and not be counted in the estate for IHT.

Of course, Ed doesnt like it when insurance companies have something beneficial.

In reality, every tax wrapper in the UK has advantages to certain groups which do not apply or could be worse for other groups of people. That is why tax wrappers exist and therefore it is not ridiculous at all.

EdInvestor

dunstonh wrote: »

Of course, Ed doesnt like it when insurance companies have something beneficial.

Not at all.What I don't like is when they use the a wrapper to load on additional hidden charges, and when they (and their salesmen/IFAs ) fail to point out that the tax benefit either doesn't exist any more (endowments) or only applies to certain taxpayers (investment bonds) or does not work as advertised (how many people are told about upfront pension tax relief, but not told that pensions are taxed in retirement,when the relief is clawed back?)
.

dunstonh

EdInvestor wrote: »

Not at all.What I don't like is when they use the a wrapper to load on additional hidden charges, and when they (and their salesmen/IFAs ) fail to point out that the tax benefit either doesn't exist any more (endowments) or only applies to certain taxpayers (investment bonds) or does not work as advertised (how many people are told about upfront pension tax relief, but not told that pensions are taxed in retirement,when the relief is clawed back?)
.

None of which is an problem with insurance companies or the tax wrappers.

As products like investment bonds and personal pensions can be charged identically as unit trusts and actually have unit trusts, it is more an issue of whom you use to advise you or how you decide to purchase them.

System

Can I ask a question here about investment bonds? An elderly relative asked me about 4 years ago to sign an enduring power of attorney so that I could manage her affairs when the time came that she could no longer manage them herself. I refused point blank when I found that she had got about £100,000 in guaranteed equity bonds scattered around and was not declaring them and was getting full pension credit. There was no way I was going to get myself into any trouble that she had started. Are these guaranteed equity bonds the same as investment bonds? Were my worries about defrauding the system unfounded? I am just a little unsure of equity bonds and investment bonds.

margaretclare

MilliesMum wrote: »

Can I ask a question here about investment bonds? An elderly relative asked me about 4 years ago to sign an enduring power of attorney so that I could manage her affairs when the time came that she could no longer manage them herself. I refused point blank when I found that she had got about £100,000 in guaranteed equity bonds scattered around and was not declaring them and was getting full pension credit. There was no way I was going to get myself into any trouble that she had started. Are these guaranteed equity bonds the same as investment bonds? Were my worries about defrauding the system unfounded? I am just a little unsure of equity bonds and investment bonds.

Well, if your relative had £100,000 in funds that she hadn't declared then IMHO she was definitely not entitled to pension credit and I personally think you did the right thing in not becoming involved to the extent of adding your signature to her fraud.

Not sure about 'guaranteed equity bonds', whether they're means testable or not, but the experts will tell you that.

HTH

Margaret

dunstonh

refused point blank when I found that she had got about £100,000 in guaranteed equity bonds scattered around and was not declaring them and was getting full pension credit. There was no way I was going to get myself into any trouble that she had started. Are these guaranteed equity bonds the same as investment bonds? Were my worries about defrauding the system unfounded? I am just a little unsure of equity bonds and investment bonds.

Early guaranteed equity bonds used the life assurance tax wrapper and a few still exist that do. Upon maturity, if you rolled them into another life assurance bond within 30 days it was classed as a continuation.

If they were in the life assurance tax wrapper and no income was being drawn and the bonds were invested prior to pension credit being claimed (at least 6-12 months) then they did not need to be disclosed.

However, i would guess that they are not life assurance GEBs as they are in the minority now and all the early ones would have matured by now.

The term bond is over used with providers and marketing men and many of the products that use the term bond are not actually bonds. Ironically, this includes investment bonds. The generic name for ones with no maturity date is "single premium, whole of life assurance". The ones with maturity are called "single premium endowment". Over time, the investment bond name used stuck (a bit like the term cashpoint is often used when in reality that was the marketing name of an ATM from a certain bank).