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Estate planning becoming more complex for IFAs

Advisers face increasing complexities in estate planning for the wealthy, says accountant Saffery Champness.

Research carried out on behalf of the firm by NOP and Spada sought the views of 1,001 affluent individuals and many of their advisers.

It found that besides the difficulties of tax planning for wealthy individuals with big estates or family businesses to pass on, fairness and equality are major considerations.

Chairman Mike Beattie says difficulties in treating siblings fairly must be combined with the need to perpetuate the life of the business or estate.

He says there are stark differences in how new and old money is passed on. For landed gentry, the key consideration is preservation of the estate, which can often override the need to treat beneficiaries equally. For the first-generation wealthy, the biggest concern is often whether the children are equipped to cope with their sudden wealth.

For entrepreneurs, there is also the risk that children lack their parents’ business acumen. Many prefer to recruit external management and let their children prove themselves elsewhere before taking on the family business.

Beattie says primogeniture – the practice of passing on the bulk of the estate to the eldest son – still exists but predominantly among those with hereditary titles.

He says: “Professional adv-isers have a responsibility to point out best practice to those confronting difficult issues in deciding how and to whom they leave their wealth. The research throws down a challenge to the professional community in asking how much it should be intervening in the decision-making process as opposed to merely carrying out bequests, no matter how unsound they might be.”

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I had to write to congratulate Ian Lowes for his article in Money Marketing (February 10). I agree 100 per cent with his response to the contracting-out issue. I have been making similar remarks to clients for many years.

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