Estate planning still vital warns AXA

Despite discussion of the inheritance tax (IHT) threshold changing after the next general election, AXA is warning investors that they might still be hit with estate planning issues.

Inheritance tax experts from AXA do not foresee any significant increases to the IHT threshold in the foreseeable future. Indeed, following rumours surrounding the imminent pre-Budget report, the threshold may be frozen for the next few years. Therefore, estate planning is still essential for most investors - especially as house prices and markets begin to rise, and an increasing number of people will require IHT planning.

AXA Isle of Man's Estate Planning Bond (EPB) can help mitigate the impact of IHT for individuals.  It is designed to provide an ‘income' during a client's lifetime through withdrawals of capital, so that individuals can aim to maintain a comfortable living while still planning for the future needs of family members.

The EPB is a combination of an offshore single premium bond and a Trust.  The bond is unit linked, meaning the investment is used to purchase units in one or more chosen funds or cash deposits, thereby pooling an individual's investment with those of other investors with similar objectives. This has the benefit of spreading the investment and administration costs.

The individual can choose the investment funds that reflect the level of risk they feel comfortable with, mindful of the need to continue supporting their chosen ‘income'.  Structured as a capital redemption bond, it offers investment and tax planning flexibility, as the investment can remain in a tax efficient environment until the trustees wish to distribute the money to the beneficiaries and has the potential to grow after death. The EPB cannot be surrendered during an individual's lifetime.

Kevin Dean, CEO, AXA Wealth International, says: "Inheritance tax is one area that advisers need to educate clients on, particularly in the current economic and political climate. The Estate Planning Bond combines the financial needs of clients in the ‘here and now', as well as their desire to plan for the future and avoid the IHT hit."