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Product Matters

The Close Brothers property wealth

management product is pitched at the wealthy end of the market by converting the asset (house) into liquid funds, through one product vehicle which encompasses reversion, life cover and investment products.

It allows you either to gift money now, access some of the money after 12 months, retain access to some of the funds, or all three.

The property is sold outright to a reversion company and an investment bond is bought along with life cover equivalent to the market value of the property. There is a 6.5 per cent bid/offer spread on the eventual value of the bond. If any of the bond is encashed then a reversion factor is applied in line with typical reversion scales, thereby reducing the value of the encashed element.

The scheme provides flexible options as the bond is split into 100 policies, which gives flexibility for IHT planning purposes. This means each individual policy can be either given away, encashed, or held for future needs. There is no need for medical underwriting as long as the client has no serious illness.

The future value of the investment is not linked to the client&#39s own property but to the value of the property fund as a whole.

This means the value of the fund could differ from the original property value. No value can be taken from the bond in the first 12 months. The entire property must be converted into reversion.

This is an ideal product for the mature individual who sees their home as a store of capital and wants to mitigate IHT and have access to funds.

Colin Taylor is managing director of Key Retirement Solutions


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