Inheritance TaxApr 16 2020

Clients have plenty of queries regarding IHT

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Clients have plenty of queries regarding IHT

A crisis such as the coronavirus has brought into sharp focus our mortality, as it is a disease that affects anyone and can be passed on by anyone.

As a result, advisers such as Jason Street, a senior wealth management consultant from Mattioli Woods, are spending more time dealing with estate planning.

“I would imagine that most families will be affected in some way, either directly or through friends, which will probably be far reaching,” Mr Street says. 

Current circumstances are prompting investors to question if they have all the later life planning in place   Simon Harryman, The Ingenious Group

“What can reassure is that they have their affairs in order and should the worst happen, they know that they won’t be leaving a mess behind them.”

At investment company The Ingenious Group, investment director Simon Harryman says as the reality of the Covid-19 epidemic was becoming evident, initially, the firm experienced a phase of quiet.

The impact of Covid-19

But as the weeks have passed, clients have become more acutely aware of their family’s mortality and this has led many investors to review their finances.

Mr Harryman says: “After seeking reassurance about their existing arrangements, the current circumstances are prompting investors to question if they have all the later life or legacy planning investments in place that they and their loved ones could benefit from.”

“For those who already have legacy planning in place, we are seeing more questions relating to some of our value-add services, which some investors include as a bolt on to their estate planning service. 

“We have been able to help advisers to support clients and their families who have later life care needs, which is particularly invaluable at this time.”

Likewise, the firm has also seen an increase in enquiries into group life insurance which covers inheritance tax (IHT) liabilities from day one as opposed to the usual two-year qualifying period for business relief investments.

With increased focus on mortality many people will be thinking about how they can protect themselves, their family and their finances.

Tim Morris, an adviser at Russell and Company, says he has been fielding a lot of protection-related calls.

He says: “We always discuss trusts and again this leads to wider trust conversations. 

“​Most questions have been about the impact of the market falls on their investments and the knock on impact this may cause to their plans.

“As well as protection enquiries for life, illness and redundancy cover, I've had a few younger clients ask about making their will. Despite raising this with them in the past, the impact of the virus has focused their minds.”

Concerns about mortality and protection all feed into discussions around estate planning.

Mr Harryman says investors and advisers are taking a greater interest in the underlying trading strategies that sit within the firm's estate planning solutions. 

They are asking more detailed questions regarding how the investee companies are operating and the opportunities and risks relating to various scenarios that could play out.

He adds: “The current situation brings into sharp focus the effect of market sentiment and volatility as investors see the turmoil in listed markets where the share prices can vary wildly from actual net asset values. 

“Our investment teams have seen this reaction many times through previous market shocks, and although each circumstance is different, the key is open communication and a steady, experienced hand to guide investors through the volatility.”

Managing assets in the current climate

Ian Cook, financial planner at Quilter Private Client Advisers says: “My clients are very much interested in the present, the actions we are taking with their investments to protect their wealth during this difficult and extraordinary time. 

“The main questions are: What are we doing to actively manage and protect their money?  Should I move to cash? Can I lose all my money? What are we doing to mitigate losses? What should I do?”

Most of Mr Cook’s conversations with clients are about reaffirming financial objectives and making sure that a period in time is not going to impact the long-term welfare of themselves, or their loved ones.

He adds: “I am using cash flow modeling, to reassure that while the current situation is a bump in the road, it will be okay in the context of their longer-term financial goals and ward them away from any impulsive moves. 

“These are unprecedented times. This kind of market volatility has been with us during many investors’ lifetime such as in 2001 and also 2008. As a financial planner I see my role to hold their hand during these periods, I find most clients just want to know they are going to be alright."

Dean Moore managing director and head of wealth planning at RBC Wealth Management, says: "Existing conversations around protection have also gained a greater sense of urgency for clients who are keen to look to secure terms before premiums increase and make use of personal allowances while they remain available.

 "In times of crisis, wealth managers can help clients focus on the bigger picture and remind them that most plans are long term at 20 plus years.”