Complex IHT Rules Spark Advice Boom For IFAs

Inheritance advice is one of the hot financial topics for IFAs and their clients but few advisers want to offer a service without the backing of a lawyer.

Huge numbers of IFAs are expecting a boom in IHT and estate planning requests from clients.

More than two thirds of IFAs (69%) told financial firm the Pru that they expected a surge in demand over the next 12 months, but more than a third (39%) want to team up with lawyers as the topic is so complicated.

They told researchers that changes in the law to allow extra relief on family homes and pension freedoms that can leave retirement savings outside the scope of IHT are challenging for non-lawyers.

Six out of 10 IFAs reported that the family home nil-rate band that increases from £100,000 in 2017 to £375,000 by 2020-21 is the main topic clients are asking about.

Pensions and property

Another complex advice area is pension savings, which come with IHT exemptions depending on the age the person owning the fund dies.

Expats are also difficult to advise as their tax status changes depending on where they live and if property or other assets are owned in two or more countries.

Paul Harrison, Head of Business Consultancy at Prudential, said: “Rising property and pension wealth are making it increasingly important for advisers to be able to help clients with specialist advice on IHT planning and demand for advice is booming.

“However, providing that advice is becoming more complex with changes to pension rules as well as IHT limits, and advisers are absolutely correct to work with other specialists to ensure that clients are receiving the best possible support.

Clients look to trusts

“Clients with final salary schemes who are seeking to take advantage of the flexibility of pension freedoms are a major source of IHT advice enquiries, advisers say. About threequarters (77%) of advisers have seen a rise in clients with final salary schemes asking about IHT planning with 59% reporting significant increases.

“One specialist area that is driving demand for IHT advice is enquiries about using trusts – more than half (52%) of advisers say they have seen a rise in enquiries about trusts for IHT planning.”

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Complex IHT Rules Spark Advice Boom For IFAs
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