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Home comforts

One of Close Brothers’ clever ideas is becoming very popular. It is the property wealth manager, which helps those with valuable houses mitigate inheritance tax while continuing to live in their home.

This is how it works. Investors sell their house to the property wealth manager fund, receiving in exchange the right to remain in the property under a 90-year, rent-free, non-assignable lease plus a capital sum which is invested in a 90-year investment bond underwritten by the leading insurance company in the Isle of Man, the Isle of Man Assurance Company.

The assets of this investment bond comprise the freehold ownership of all the houses of investors participating in the fund. There is an immediate IHT benefit as the premium is significantly less than the death benefit on the bond and after seven years it is fully exempt from IHT.

The death benefit reflects the vacant possession value of all properties in the fund.

This plan is particularly suitable for those aged 60 or over who wish to stay in their home and pass its value on to their family.

If they want to move, the fund will sell their house and buy the new property for them. When the investor dies, the fund will sell the house but the family will be able to buy it back with the proceeds of the bond if they so wish.

This plan is ideal for those who are property-rich and cash-poor who wish to save IHT and pass on the full benefit of their property to their children. It fills a gap which I think cannot be achieved elsewhere.



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