The Financial Ombudsman has ordered financial advisors Towry to compensate a woman who has complained of being mis-sold a whole-of-life insurance policy in 2004 to mitigate a GBP800,000 inheritance tax liability. Her complaint was upheld on the basis that a maximum sum assured policy is generally not suitable as a long-term solution for inheritance tax liability, and she should have been advised to discuss her IHT position with her solicitors.
Why Whole-of-Life IHT Cover May Not Suit Everyone?
When planning for inheritance tax (IHT), selecting the right insurance coverage can play a key role in protecting assets for future generations. Recently, DND Law in Newry reviewed a case involving a 55-year-old client whose financial advisor had recommended whole-of-life cover to manage potential inheritance tax liabilities. However, after a thorough analysis, the team at DND Law concluded that this approach might not be ideal for this particular client’s needs.
Understanding Whole-of-Life Cover in IHT Planning
Whole-of-life insurance cover is often marketed as a suitable means of managing IHT liability because it offers coverage for an entire lifetime rather than a set period. The proceeds from a whole-of-life policy can help beneficiaries manage IHT obligations by paying part or all of the tax bill, potentially reducing the financial strain of inheritance tax on family members.
However, for some clients, especially those over 50, whole-of-life insurance can have drawbacks. Premiums typically increase with age, and in cases like our client’s, costs could become unsustainable. For this 55-year-old, DND Law’s financial and legal analysis revealed that premium costs over time would likely be higher than alternative IHT planning strategies, making this form of cover potentially unsuitable.
Alternative IHT Planning Solutions
For clients facing inheritance tax challenges, particularly those in or approaching later life stages, there are several viable alternatives to whole-of-life cover. Trusts, gifting assets, and lifetime transfers can offer more manageable IHT solutions. Trusts, for example, can help reduce IHT liability while providing a structured approach to asset distribution. DND Law’s estate planning team specialises in creating tailored solutions like trusts that align with each client’s unique financial circumstances.
DND Law works closely with clients to explore these options and others, tailoring the best combination of strategies to meet their goals. Whether a client needs help establishing a trust, navigating asset transfers, or seeking a combination of approaches, our team offers personalised legal guidance.
Support Beyond IHT: Personal Injury and Divorce Services
In addition to inheritance tax planning, DND Law provides comprehensive legal services, including personal injury solicitors in Newry and divorce solicitors. With expertise in family law, personal injury, and inheritance tax, DND Law offers support to individuals and families during some of life’s most challenging times. Our personal injury solicitors in Newry are dedicated to securing the best outcomes for clients who have suffered from accidents, while our divorce solicitors offer experienced guidance through family law matters in Newry.
The Importance of Tailored Financial and Legal Advice
Inheritance tax planning, especially for those over 50, requires careful consideration of the client’s needs, age, and financial goals. As DND Law’s recent case demonstrated, whole-of-life cover may not be the most effective strategy for every client. By offering tailored solutions, DND Law helps clients optimise their inheritance tax strategies while also providing reliable support in personal injury and family law matters in Newry.
For more information or to speak to a solicitor about inheritance tax planning, personal injury, or family law, contact DND Law in Solicitor Newry today. Our team is committed to helping you navigate legal challenges with confidence and clarity.
