Meeting with IFA / Wealth Advisor & 2027 pension changes

segovia

We have been self-employed for 40 years, retired at 70 this year, I own my home and invested in commercial property and diverted surplus funds in to / my our SIPP's to the value of £1.5 million, house value 850k + savings. We had a meeting with a wealth advisor. IHT estimated at today's rates / regulations valuation is 70k. IHT estimated at 2027 rates, 800K. Anyone else fallen into this 2027 IHT trap and if so what are you doing, if anything ? 

gm0

There are several relevant threads already.  Some serious.  Some more light hearted.  There are many.  But this one was mine

https://forums.moneysavingexpert.com/discussion/6626266/2027-pension-reforms-revising-strategies-for-dc-drawdown-planning/p1

Focused on the large DC pot suddenly part of estate issue and the mainstream mitigation strategies.

Enjoy

Daniel54

Firstly,make sure your advisor is independent (IFA) and not a tied agent

We are the same sort of age and alreadydeep into IHT territory, but the bulk of my income is from DB pensions and the planned change on inheritability drops my SIPP value of circa £350k into my estate, which is certainly not welcome but less than you are facing

I've had all sorts of useful advice from my IFA,including such as trusts and bonds, but decided a few years ago that gifting to our children and the next generation was the way to go, both out of regular income and then larger amounts with fingers crossed over the seven year rule.

So,i don't have a silver bullet but  would encourage you to think about gifting more.If you don't have children your wife inherits free of IHT anyway.

Savvy_Sue

Just checking, "we" are married or in civil partnership?

segovia

Savvy_Sue said:

Just checking, "we" are married or in civil partnership?

We are Married 

segovia

Daniel54 said:

Firstly,make sure your advisor is independent (IFA) and not a tied agent

We are the same sort of age and alreadydeep into IHT territory, but the bulk of my income is from DB pensions and the planned change on inheritability drops my SIPP value of circa £350k into my estate, which is certainly not welcome but less than you are facing

I've had all sorts of useful advice from my IFA,including such as trusts and bonds, but decided a few years ago that gifting to our children and the next generation was the way to go, both out of regular income and then larger amounts with fingers crossed over the seven year rule.

So,i don't have a silver bullet but  would encourage you to think about gifting more.If you don't have children your wife inherits free of IHT anyway.

I agree gifting seems like the logical way to go; however, we then have to consider her relationship with her current boyfriend of many years. They are just getting on the housing ladder and will be living together for the first time. We need to ringfence any gifts so they remain hers, a trust was mentioned for this purpose.    

Keep_pedalling

segovia said:

Daniel54 said:

Firstly,make sure your advisor is independent (IFA) and not a tied agent

We are the same sort of age and alreadydeep into IHT territory, but the bulk of my income is from DB pensions and the planned change on inheritability drops my SIPP value of circa £350k into my estate, which is certainly not welcome but less than you are facing

I've had all sorts of useful advice from my IFA,including such as trusts and bonds, but decided a few years ago that gifting to our children and the next generation was the way to go, both out of regular income and then larger amounts with fingers crossed over the seven year rule.

So,i don't have a silver bullet but  would encourage you to think about gifting more.If you don't have children your wife inherits free of IHT anyway.

I agree gifting seems like the logical way to go; however, we then have to consider her relationship with her current boyfriend of many years. They are just getting on the housing ladder and will be living together for the first time. We need to ringfence any gifts so they remain hers, a trust was mentioned for this purpose.    

Trusts are not a magic formula and often creat more problems than they avoid. If you are gifting a deposit your daughter and her partner can purchase a property as tenants in common with the percentage ownership based on how much they each put in. This would protect her deposit if things went pear shaped. 

bunnygo

with care costs currently at £7k a month (care home or live in) be careful how much you give away - health will be very different if you get into your 80s. Or even earlier.

poseidon1

segovia said:

Daniel54 said:

Firstly,make sure your advisor is independent (IFA) and not a tied agent

We are the same sort of age and alreadydeep into IHT territory, but the bulk of my income is from DB pensions and the planned change on inheritability drops my SIPP value of circa £350k into my estate, which is certainly not welcome but less than you are facing

I've had all sorts of useful advice from my IFA,including such as trusts and bonds, but decided a few years ago that gifting to our children and the next generation was the way to go, both out of regular income and then larger amounts with fingers crossed over the seven year rule.

So,i don't have a silver bullet but  would encourage you to think about gifting more.If you don't have children your wife inherits free of IHT anyway.

I agree gifting seems like the logical way to go; however, we then have to consider her relationship with her current boyfriend of many years. They are just getting on the housing ladder and will be living together for the first time. We need to ringfence any gifts so they remain hers, a trust was mentioned for this purpose.    

A competent conveyancing lawyer will invariably reccomend a declaration of trust that not only deals with the intial deposits between the purchasing parties but how the build up of additional equity occurs between them where there is un equal contributions to the mortgage payments - see article below

https://www.elitelawsolicitors.co.uk/declaration-of-trust-for-property/

Trusts in this scenario provides a ( hopefully) agreed baseline of how future property proceeds should be divided in case of a future parting of ways of the parties. Of course if the couple then go onto have children, the trust may become subordinated to the best interest of the child during minority ( and maybe beyond). 

Obviously these are matters many young couples do not think about in advance, but if you are providing substantial funds to assist in house purchase, clearly you have an interest in helping secure best financial outcomes for your child even if this is not top of her list of priorities.