Planning for a rainy day

INCREASING PROPERTY PRICES mean that more people's estates are now subject to inheritance tax on death. This coupled with the various changes introduced in respect of trusts in this year's Finance Act means that advisers are looking for other ways of saving inheritance tax for clients. The purpose of this article is to show the different ways that insurance products could be used to this end. I have included examples to illustrate the schemes but do not have space to include a full technical analysis. To simplify the examples I have also assumed a single person e.g. a widow or widower not a married couple as the client.

Many clients have most of their wealth tied up in the value of their home with perhaps a small amount of investment income while relying on their pensions for day-to-day living. These clients may not be...