Clients with large amounts of assets typically don’t want to give up control of their portfolios, but wealth managers can get around this by focusing on income-producing assets.
Minesh Patel, a London-based financial adviser, said: “Older people tend to want to keep control of their assets, but this may be because they have worked hard to accumulate assets, the future is uncertain, or they are worried. It is possible that they are suffering from this.” about the behavior of their children.
“It may be related to the longevity of the heir’s romantic relationship, or whether the heir has addiction issues, which can make it difficult to develop an IHT tax strategy in some cases. But what I often do is to optimize a client’s portfolio.”If an asset produces income, the client can share in that income, but maintain control of their capital. ”
Emi Page, who works in private clients practice at law firm Winkworth Sherwood, says the annual amount that can be gifted tax-free is £3,000 or £5,000 if the recipient gets married or enters into a civil partnership. said. There are no restrictions on gifts between spouses.
Gifts over this amount will be considered part of the client’s estate upon death and may result in inheritance tax liability later.
Alan Kinnaird, head of business development at asset management firm Walker Cripps, said: “For many people, in the case of large estates, it may be necessary to relinquish control of some assets to reduce potential liability.” “This could be a difficult time because it means things are not going to happen.” Customer emotions play a big role. This is especially true for customers who are used to owning and controlling a significant portion of their family’s wealth.
“It’s always best for clients to review their IHT liability on an annual basis, so they avoid the feeling of having to rush into a decision.”
Anna Warren, tax director at wealth management firm Bentley Read, says that when discussing inheritance tax planning, wealth managers make sure that clients never feel like they are losing control of their assets by ensuring that it is a “collaborative approach.” “Efforts should be made to make it an exercise,” he said. Clients don’t feel “overwhelmed with details.”
