Finance Monthly Taxation Awards 2019 Winners Edition

UNITED KINGDOM | EUROPE ABOUT GEORDIE BULMER GeordieBulmer has been awarded Inheritance Tax Planning Adviser of the Year UK for the second year running. His company AISA Retirement Planning are part of the AISA group, who he has worked with for over 10 years as an Independent Financial Adviser as well as being a member of the AISA Investment Committee. He has previously worked for AWD Chase de Vere, Clerical Medical and Natwest, with over 18 years experience in Financial Services and a degree in Economics. We asked him to run through a few recent examples of where he has discussed Inheritance Tax planning with his clients. INHERITANCE TAX PLANNING I used to actively promote Inheritance Tax Planning solutions through client seminars which I ran at AWD Chase de Vere and AISA. Then I moved on to setting up websites with Inheritance Tax information and aiming to attract clients that way. However these days my Solicitor and Accountant contacts refer leads to me and these clients are usually aware of their potential tax liability and keen to do something about it as soon as possible. When a solicitor reviews a clients situation whilst writing their Will or LPA, they can assess whether a client has an Inheritance Tax (IHT) liability. My solicitor would talk through the basics and then pass my details on so that they can make contact and discuss their options in detail. A typical solution would then involve making the most of ‘gifting’ allowances and sometimes include a regulated investment within a Discretionary or Absolute Trust. If it’s my Accountant who refers a client then it is often following the sale of a business and the business owner may have suddenly found that they have a very large Inheritance Tax liability. In these types of cases I would sometimes aim to ‘requalify’ some of their Business Relief, so that the sudden IHT bill isn’t as high as when they first sold the business. It’s important to assess the risk that the client can accept because many investments that qualify for Business Relief are considered higher risk. Therefore, if someone has just sold a business and expects to live on the proceeds for the rest of their life, then they may not want to risk losing money in a volatile investment. A client may tell me that their main objective is to reduce their IHT bill but there are various issues to be considered regarding access to income and capital during their lifetime. If they were to lock money away in Absolute Trusts or invest in BR schemes that may lose money, then it could affect their lifestyle in the future. Therefore we try to avoid the requirements for tax saving being an overriding objective. For some clients there are further complications that can arise from an Inheritance Tax bill, depending on how their Will has requested assets to be distributed among beneficiaries. For example, I recently met a widowed client who has a total estate worth £3 million. This was made up of £1m invested assets, £1.5m in her home and she also owns a second property worth £500,000 where one of her daughters lives. She wants to write her Will so that she leaves her £1.5m home for the benefit of her four Grandchildren and the other assets to be split between her two daughters. However, the Inheritance Tax bill on the estate will be almost £1m therefore using up the available assets and just leaving the second property to be split between her two daughters. One of the daughters uses the property as her family home and due to her financial situation would not be able to obtain a mortgage for half the value in order to pay money to her sister as her half of their inheritance. Unless the family discuss this potential situation and the client review her decision to gift her home directly to the Grandchildren, at least until any Inheritance Tax solution has achieved its objectives, then there could be a future disagreement between the two daughters. GEORDIE BULMER - AISA RETIREMENT PLANNING 29