Zurich pays up over misleading IHT investment advice
Zurich is to pay more than £220,000 in damages to a 96-year-old English woman who as not lived in the UK since 1948 after the High Court ruled one the insurer's representatives had given her inheritance tax advice on an 'entirely false' basis
9 Jan 2017
The case concerned Angela Lenderink-Woods, who was born in the UK but who acquired a domicile of dependency in the Netherlands following her marriage to a Dutch naval captain in 1944, after which she lived in a number of overseas locations. Since 1980 she has been resident in Costa Rica. [Angela Lenderink-Woods and Zurich Assurance Ltd, Zurich Advice Network Ltd, Cherry Lenderink,  EWHC 3287 (Ch) Case No: A50MA133].
Davies was a tied adviser, and following his advice, Lenderink-Woods moved her portfolio into three Allied Dunbar products: a gift and loan trust scheme, an offshore investment bond, and a portfolio bond, the assets of which were overseen by a discretionary manager.
The advice provided by Davies was subsequently challenged some years later by Lenderink-Woods and three of her daughters, over concerns about whether it met her requirements to mitigate any IHT liability for her children and also with regards to the size of the charges applicable on the funds he suggested. Zurich ceased operating its Allied Dunbar network of advisers in 2005 after an endowment policy mis-selling scandal.
The court heard that at their original meeting, Davies identified that Lenderink-Woods had a gross estate of £586,677 for inheritance tax purposes, and advised there was a potential IHT bill of £137,871, which was subsequently revised to a lower figure of £130,300.
The High Court noted: ‘It is very difficult to see where that figure came from given the terms of the investment analysis which Mr Davies prepared. It is £72,000 less than Mrs Lenderink-Woods' total estate as estimated by Mr Davies in the sum of £658,677, whereas the nil rate band was then £242,000: but it undoubtedly includes within the scope of the potential charge to UK inheritance tax at least some of Mrs Lenderink-Woods' offshore assets.’
The damages award of £223,000 was reached by calculating the impact on the fund value to July 2016 of the 'unnecessary charges' that were imposed through Davies’ scheme.
A Zurich spokesman said: ‘Zurich notes the judgment delivered by the Manchester High Court. The events which formed the subject of the claim took place nearly 16 years ago, and Zurich ceased operating a network of advisers over 10 years ago. Zurich accepts the ruling and will comply with it.’
For the full case report, click here.