Wealth preservation
The financial details
Pension income – £13,000 per annum
Total assets – £650,000; £250,000 in cash, £400,000 invested
The personal details
- Single lady, age 84
- Inherits a large amount money
- Doesn’t really understand financial matters, found having so much money a burden
- Very risk averse
- Keen to utilise capital to generate additional income
- Wanted to pass on assets, worried about inheritance tax implications
Our solution
- In conjunction with our client’s solicitor, we invested some of the capital into two tax efficient trust arrangements. This immediately reduced the size of the taxable estate
- Withdrawals from the trust increased our client’s income and not income tax
- We reduced the level of risk in the investment portfolio in line with our client’s preference for low risk
- Our client’s solicitor was appointed as trustee to the trust.
The outcome
- Significant protection from Inheritance Tax
- The value of the estate will reduce still further over the next seven years reducing Inheritance Tax liability still further
- Our client’s income was increased by £625 per month, tax efficiently
Our client has the peace of mind that she has a professional team looking after HER interests.
Increasing income in retirement
The financial details
Home – £800,000
Mortgage – £60,000
Investments – £50,000
Pension fund – £650,000
Pension income – £20,000
The personal details
- Married couple in early retirement
- Worried about being able to maintain their standard of living
- Wanted to avoid becoming high rate tax payers
- Husband worried about his wife’s security in the event of his death
Our solution
- We restructured our client’s pension plan into a more flexible, progressive arrangement with potentially better investment returns
- We selected a specialist external investment managers to provide expert fund management and research on an ongoing basis
- We released tax-free capital to pay off all debts including the mortgage
- We established a sustainable level of income using the client’s tax allowances.
The outcome
- Our clients’ are now mortgage and debt free saving on interest payments each month
- Income was increased by £1,400 per month
- Maximum flexibility was retained on future access to further income and capital
- The structure of the plan ensures the wife has full access to the income and capital in the event of her husband’s death
- The risk and return characteristics of our clients’ investment portfolio has been improved.
