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Helping clients overcome barriers to trust planning

According to our research, the three biggest barriers advisers face when recommending trusts to their clients are as follows:

 

28% of advisers say clients believe trusts are too complicated and don’t understand them

There is a perception that trusts are too complicated for clients to understand. However, through better understanding, more advisers and therefore more clients have realised the effectiveness trusts can have as a financial planning tool. Not only can they help to significantly reduce an individual’s exposure to IHT, they can also help to ensure that the right people get the right proportion of assets at the right time.

The perception that trusts are complicated prevents clients from attempting to ‘DIY’ in this area, giving advisers an opportunity to demonstrate real value in the advice they offer.

A new five-step programme of support in trust planning has been launched on the financial adviser site of Old Mutual International. This support, which includes a trust decision tool and form finder, can help you develop a better understanding of trusts and become more familiar with the range of trusts available and how they can help your clients. Click here to see the new site, which includes some new simplified sales aids.

 

 

25% of advisers say clients don’t want to give up control over their assets

When assets are placed in trust, legal ownership passes to the trustees who then have responsibility for managing and distributing the trust fund to the beneficiaries. It is understandable some clients will have concerns before transferring wealth they’ve spent considerable time and energy accumulating.

However, trusts don’t have to be seen as a loss of control, rather they’re legal arrangements made by your clients with trustees that determine how beneficiaries are to be looked after. Clients are, in essence, taking control to protect wealth for their beneficiaries.

The appointed trustees are under a fiduciary obligation to put the interests of the beneficiaries above their own and the newly ring fenced assets can only be distributed to your client’s intended beneficiaries.

 

 

17% of advisers say clients don’t know how much capital they will need in later life

With the increase in life expectancy, and uncertainty over care costs, clients don’t know how much money they will need access to in later life. However, the types of trusts available in today’s market can help reassure clients by building in flexibility to access funds in the future.

Several trusts enable the settlor (client) to access money, one of the most popular being the Lifestyle Trust, where the client decides whether or not to access funds at fixed points in the future.

For IHT purposes, once money is placed in a trust it is usually removed from the settlor’s estate after seven years. So there is an incentive to start trust planning sooner rather than later, and trusts which provide the settlor with access can help alleviate their concerns over future uncertainty.

 

For financial advisers only. Not to be relied on by consumers.

The information provided in this article is not intended to offer advice. It is based on  Old Mutual International's interpretation of the relevant law and is correct at the date shown on the title page. While we believe this interpretation to be correct, we cannot guarantee it. We cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained in this article.


*Old Mutual International adviser survey, June 2018, 180 respondents from across the UK, Europe, Middle East and Asia.

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