I first met Keri when my late husband sold his company shares and we turned to Broadway Financial Planning for investment advice. Keri quickly impressed us with her vast knowledge and understanding of the financial marketplace and global economies.
At BFP, we have always placed a high level of emphasis in working closely with our clients’ other professional advisers. We believe it’s essential to be able to bring together all of the components necessary for comprehensive Financial Planning to ensure best advice in any of the disciplines, be that legal, accounting or fund management.
The importance of this approach was recently highlighted in a case brought about in Leeds County Court.
The case involved a financial adviser who had successfully defended a claim brought by two relatives of his, now deceased, client on the grounds that he failed to tell the client that a loan trust he set up for her would form part of her taxable estate at death. The judge decided that the financial advisor did not have a duty of care to the claimants, as he had not been involved in the will-making process.
The client, wanted to leave as much of her money as possible to two relatives, whilst protecting it from Inheritance Tax as far as possible.
She consulted her usual financial adviser, and he advised her to put £175,000 (representing the unused part of her inheritance tax (IHT) nil-rate band) into a discretionary trust. The rest – amounting to £125,000 – would be placed in a loan trust naming her relatives as the sole beneficiaries. Although the capital placed in the loan trust would fall into the estate on her death and would thus be liable to IHT, any capital growth would be outside the trust and thus pass to the beneficiaries free of IHT.
After she had done this, she made a new will following a meeting between her, her solicitor and her adviser. The solicitor failed to find out sufficient detail on the nature and value of these trusts and subsequently wrote the client’s will in such a way that, on her death, a short time later, her beneficiaries incurred unexpected Inheritance Tax and received significantly less money than they had expected. They later sued the adviser and the solicitor for negligence.
Their claim was settled against the lawyer by mediation and Leeds County Court has now ruled on the claim against the financial adviser.
The judge decided that the adviser did not have a duty of care to the claimants, as he had not been involved in the will-making process. The claim was therefore dismissed.
Instead, he said the lawyer was negligent in drawing up the will without satisfying himself that the trust assets would pass to the claimants on her death. He concluded that the lawyer did not have sufficient information about the trusts before drafting the will, and instead relied on a short conversation and information contained in an aide-memoire written by the adviser after the joint meeting
The lawyer did not agree with this judgement but, for us, it highlighted all of the reasons why we work closely with professional connections in order to ensure the best outcome for our clients, their families and also the protection and security of our businesses.
If you would like to find out more about how we work with our professional connections, please do not hesitate to contact us.
Keri Carter, CFPCM
Certified Financial Planner