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IFAs told to sit tight amid trust turbulence

As some providers launch new products and others fail to act, advisers are recommended to wait for Finance Act

Advisers are being warned to be patient amid the confusion over the Budget changes to inheritance tax and trusts.

The Chancellor’s unexpected attack on trusts has led some providers to withdraw their plans and launch new ones, despite the new rules not yet being confirmed, while other providers have been accused of burying their heads in the sand.

Thorn Financial Management director Martin Morris-Cole says the proposed changes are a grey area and advisers should wait until the Finance Act is published in July before making recommendations to clients as providers may come up with better solutions.

He says: “Our clients are very understanding. They appreciate that this is a widely criticised Treasury move and not a financial services one.

“I expect that there might be some increased activity in the Aim and venture capital trust markets that are being marketed as alternative solutions.”

Worldwide Financial Planning says insurance companies should market their products sensibly rather than withdraw them altogether. However, it says some key features documents will be impossible to write until the new rules are confirmed.

Managing director Peter McGahan says: “IFAs need to satisfy themselves that they are confident in advising on these products. Insurance companies are not going to pay my professional indemnity cover if it all goes wrong. It is their job to market the products responsibly.”

Unizone principal Richard Prudence says IFAs should be patient. He says some providers have been forthcoming with the information they are putting out on IHT and trusts but others have been burying their heads in the sand.

Prudence says: “Many that are normally quite vocal have been noticeably quiet, so the good providers are standing out. Advisers must hold back until everything is made clear. My biggest fear is that all these changes will lead to the creation of inflexible trusts.”


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