Revelations that UK families are potentially paying out millions in wholly unnecessary IHT bills has really sparked discussion with our users this month, as has the need to keep funds relatively liquid while still achieving worthwhile returns. The power of the brand is also noticeably more of a talking point too.
The question of the best brands becomes complicated
We launched our matching service back in 2012 with the mission of helping time- poor individuals navigate the diverse UK wealth management market. The abundance of providers is undoubtedly a good thing, but this does make it difficult to know exactly what is available for your needs and intended investment level – and particularly so given that many very good institutions keep a fairly low profile.
Brand and reputation have always been a focus of our conversations with those seeking a wealth manager, but this has now really come to the fore as the private banking sector has been in the headlines and mergers and acquisitions continue apace
Brand and reputation have always been a focus of our conversations with those seeking a wealth manager, but this has now really come to the fore as the private banking sector has been in the headlines and mergers and acquisitions continue apace. Our matching service has always given those seeking the best providers around the edge, but don’t forget the value of our team of industry experts who can offer invaluable advice as you weigh up providers.
A crucial IHT carve out sparks conversations
The Telegraph recently reported that some 40% of estates which paid Inheritance Tax (IHT) in the 2020-21 tax year included life insurance policies, and that therefore some £332m of inheritance tax on £830m may have been needlessly paid out. The revelation of such figures in the money pages really seems to have hit a nerve with several of our users.
The crux is that life assurance and insurance policies can be ‘written into trust’ which means that a named beneficiary (or beneficiaries) will receive the funds directly on proof of death; then as the monies never form part of the deceased’s estate, the payout is therefore not liable for IHT (which is effectively a tax on the reduction of an estate’s value through the disposition of property).
As well as the headline benefit of taking life insurance and assurance policies out of the estate for IHT purposes, writing into trust can also have the inestimable benefit of offering a large sum which the family can use to pay the IHT which is unavoidably due on an estate
As well as the headline benefit of taking life insurance and assurance policies out of the estate for IHT purposes, writing into trust can also have the inestimable benefit of offering a large sum which the family can use to pay the IHT which is unavoidably due on an estate. It is perhaps not well known, but the Revenue gets paid first and this has led to many families having to take out bank loans or to sell the family home to pay large IHT bills.
If you are interested in speaking to a wealth manager about how to reduce the IHT liability on your eventual estate, look out for our forthcoming feature Which assets get caught in the IHT net?
Top Tip
As is usual, a real variety of reasons have inspired this month’s users to get in touch and take our short wealth manager matching questionnaire. The conversations we’ve been having about wealth managers’ brands and reputations have been particularly enjoyable though, as it’s always great to hear about the industry in action – the good and not so good too when that has unfortunately occurred.
Whatever your aspiration for your wealth, and your wealth manager, we can help you find the optimal path, fast and free.
Lee Goggin
Co-Founder
On the lookout for liquidity (but no compromise on returns)
Although one of the retail banking giants recently announced an instant access account paying 7%, a closer look at the terms and conditions may have rather taken the shine off of this offer. Few people wish to change over their accounts for day-to-day use and be bound to monthly deposit minimums to access one-off saving rates.
High Street banks have been notoriously slow to pass on interest rates rises to customers leading to rising numbers of individuals coming to us to explore private banking possibilities
People are certainly seeking a combination of liquidity and better returns than the typical current or even savings account though. High Street banks have been notoriously slow to pass on interest rates rises to customers leading to rising numbers of individuals coming to us to explore private banking possibilities – and chats around low-risk, more liquid investment options like money market funds have really proliferated. It seems like many are wanting to have wealth ready to deploy when markets get back to normal after the holidays.
If you are looking for an investment solution with a particular risk-return-liquidity profile, see what the leading experts in the field are thinking fast and free.
Time for a wealth refresh
There is a certain ‘back to school’ energy in the air, and we always advise individuals who know they need to take action to harness that energy when it arises.
Meeting your ideal wealth managers is fast and free through our our unbiased matching service, meaning that you can devote your energies to choosing from a short list of providers, rather than having to construct that short list from scratch.
Important information
The investment strategy and financial planning explanations of this piece are for informational purposes only, may represent only one view, and are not intended in any way as financial or investment advice. Any comment on specific securities should not be interpreted as investment research or advice, solicitation or recommendations to buy or sell a particular security.
We always advise consultation with a professional before making any investment and financial planning decisions.
Always remember that investing involves risk and the value of investments may fall as well as rise. Past performance should not be seen as a guarantee of future returns.
