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Way plan shields against IHT

Way Group has set up an estate planning vehicle that it claims will allow policyholders to safeguard unlim ited funds from inheritance tax.

The Way estate transfer plan uses an absolute trust to hold funds for future beneficiaries so a gift qualifies as a potentially exempt transfer. The investor decides how much of the assets should be placed within the Pet and buys endow- ment policies offered by Isle of Man Assurance linked to one or more of Way’s portfolio funds.

The investor gifts the death benefit to these newly invested policies via a specialist absolute trust for the beneficiaries named by the donor. As long as the donor survives seven years, any value remaining within the trust will escape IHT.

The maturities are at fixed times and levels chosen by the donor. The retained value for these maturities reduces the value of the initial gift for IHT purposes so the gift is at discounted value.

Way Group chairman Paul Wilcox says: “This is the light at the end of the tunnel for seriously wealthy investors.”

Worldwide Financial Planning managing director Peter McGahan believes the plan will be copied throughout the market but says its main downside is that it uses Way portfolio funds which he says have only shown average performance.

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