Insignis 016: Get Cash Clever - Why trusts are back in the spotlight for 2025

Welcome to this week's edition of Get Cash Clever by Insignis Cash.

In this week’s edition, we explore just how much money could be sitting in unclaimed Child Trust Funds (CTFs), the challenges investment providers pose for advisers, and why advisers are fielding calls about opening trusts from their clients.

Current Bank Rate: 4.75% (Bank of England) The next update is due on December 19th, 2024.

CPI Inflation Rate: 2.5% (Bank of England)

TOP INSIGNIS SAVINGS RATES*

Easy Access –? Shawbrook Bank: 4.43%?

6 Months Fixed – Close Brothers Savings: 4.75%

1 Year Fixed – National Bank of Egypt (NBE) 4.65%

'Advisers feel they are battling other parts of industry for clients’ (FT Adviser)

Insignis Cash CEO, Giles Hutson was featured in the FT Adviser emphasising why advisers are feeling under pressure from investment providers. Giles called out specific providers launching products to target clients directly and cross-sell. You can read the full article by clicking ‘FT Adviser’ in the heading above.

Child Trust Funds worth ￡1.4bn still unclaimed, figures suggest (BBC)

This article from the BBC highlights that young adults may not be aware of unclaimed Child Trust Funds (CTFs) set up by the government. CTFs could be a valuable conversation starter when discussing financial literacy for your client’s children or as an introduction to your client’s adult children who may become future clients.

Bond wobble underscores allure of cash (FT)

Despite predictions for a bond rebound in 2025, early market trends show bond prices stumbling as investors shift from expecting bond-related rate cuts by the US Fed to considering rate hikes. While long-term bond yields remain attractive for those willing to lock in investments, many clients remain cautious, choosing to hold cash, which continues to prove resilient.

What’s behind the increase in clients requesting trusts?

What happened?

Trusts have long been a cornerstone for protecting wealth with their tax advantages, powerful protections, and the lure of safeguarding assets for future generations.

The government's recent changes to IHT and pensions have pushed many HNWIs to consider their wealth is under threat. As we know, farmers and business owners have been particularly hard hit with the government tightening IHT relief on agricultural and business property. Adding to the urgency, pension pots will soon face inclusion in IHT calculations, further complicating estate planning.

?Meanwhile, rising interest rates and persistent inflation are forcing clients to reevaluate the opportunity cost of parking cash in trusts versus leaving it more readily available.

Why does it matter?

Trusts are no longer just a safety net; they are becoming a strategic necessity for preserving wealth amid economic and policy shifts. Yet, their complexity is not to be underestimated. Naturally discretionary trusts, for instance, provide powerful protections against divorce or bankruptcy but can also trigger hefty 20% IHT charges on contributions over ￡325,000—not to mention ongoing ten-year charges.

Clients face a delicate balancing act: safeguarding assets for future generations while maintaining the liquidity to meet near-term goals. With inflation chipping away at purchasing power and interest rates still elevated, advisers have a critical role in helping clients strike the right balance between trust-held assets, accessible cash, and growth-focused investments.

What could this mean for your clients?

For clients contemplating trusts, the clock is ticking. The months ahead are a unique window to act under today’s IHT rules, potentially securing significant tax advantages before the landscape shifts. This is the time to dive deep into how trusts align with their wider estate plans. Looking ahead, there are also "Trump trade" concerns and potential shifts in growth stock themes may influence investment trust strategies.

Trusts aren’t a one-size-fits-all solution, but with the right advice, they’re a powerful tool for weathering uncertainty. By initiating meaningful conversations about their legacy and priorities, you’ll not only help clients protect their wealth but also build deeper, more trusted relationships in a rapidly evolving landscape.

Wishing you a wonderful rest of the week. Until next time!

The Insignis Cash team

*Rates are correct on the Insignis Cash Platform as of 21st December 2024. All interest rates displayed are quoted gross p.a. and easy access may be variable. Rates are subject to a minimum and maximum deposit size, please shop around. Availability of products will vary depending on the client type. Check your FSCS coverage. Fixed-term deposits cannot be broken early. Insignis Cash does not provide financial advice.

Market information does not constitute financial advice. Forecasts may change and actual performance may vary. Please seek your own professional financial advice before making a decision.

Insignis Cash is a trading name of Insignis Asset Management Limited (Company number 09477376). Insignis Asset Management Limited is authorised by the Financial Conduct Authority under the Payment Service Regulations 2017 (813442) for the provision of payment services.