Inheritance tax advice boom?

A boom in demand for inheritance tax (IHT) advice is just around the corner.

So says new research which also concludes that financial advisers are looking to strengthen business partnerships with lawyers to help them cope with the demand.

The findings come from Prudential who questioned IFAs and discovered that seven out of ten financial advisers expect to see IHT planning grow over the next year.

But, 17% of advisers admitted that despite the rise in demand, due to regulatory changes, they are not sufficiently confident in advising on IHT issues and want to develop links with legal firms and other specialists.

The key findings reveal that:

• 37% of advisers are forecasting a significant increase in clients demanding advice on IHT planning;
• 35% are building relationships with lawyers to boost links with other specialists, 22% already work closely with legal firms;
• close to 60% of advisers say part of the increase in demand is being driven by new IHT rules that came into effect in April 2017. 

Head of Business Consultancy at Prudential Paul Harrison 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 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 three-quarters (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.”

Partner at Irwin Mitchell Private Wealth Kelly Greig said: “With the introduction of the Residence Nil Rate Band (RNRB), large number of clients with second properties and increasing complexity of Inheritance Tax (IHT) mitigation, it is not just consumers who are seeking expert legal advice but increasingly financial advisers who are turning to lawyers to help with their clients’ needs.

“Modern families are also becoming more complex with multiple marriages and cohabitation more common. This makes wills and trusts more complicated and estate planning, which should integrate legal, tax and financial planning, is often best served when financial advisers and legal/tax planning advisers work together.

“Financial advisers who work closely with lawyers can ensure that their clients and families do not face a legal or tax problem in future, and that their clients’ families benefit from an inheritance as intended.”

Table below shows the key issues that advisers believe are driving demand for IHT advice.