Five years ago H and W were advised by private bank on IHT planning and we’re recommended to set up a discretionary trust For each of them in the Isle of Man in which they, their children And is you were the discretionary beneficiaries who could benefit. They and their children are the trustees. They each gifted 250k into their Respective trusts and the investment portfolios are now each worth over 350k. The private bank has now accepted that this was bad advice as they had made gifts with reservation. I would be interested to know what members views are regarding how this can now be addressed and how the clients should be compensated. They were charged a five figure fee for the advice.
My view is that the Trusts should be wound up And the funds repatriated so that they may start over again, this time excluding themselves from benefiting. The private bank should pay the capital gains tax and either undertake to pay any additional IHT which may arise should either of them fail to survive seven years from setting up of the new trusts or alternatively fund the cost of reducing term insurance policy Which would cover against death within seven years.