Click below to discover how we have helped our clients achieve financial peace of mind.
Considering early retirement
A long standing client introduced to us by their solicitor (who was himself also a client) needed investment advice on inherited funds, and guidance for their family including their children with whom some of this good fortune was shared (in order to maximise tax efficiency) on how to ensure these funds when supplemented by pension provision would cover their requirements for the rest of their lives.
The client was not sure that early retirement – although heartily desired – was feasible, and so this was a perfect case for our Expert Navigation Service, designed to help with ‘life planning’ reaching beyond financial planning. We were able to produce evidence based on reasonable and conservative projections to reassure the client that the family’s plans were indeed achievable and they are now enjoying a fulfilling early retirement travelling abroad.
Freeing invested money
A senior professional, prompted by the pensions revolution introduced by the Thatcher government, had set aside significant sums on our advice out of earned income, making use of income tax relief. Later on, the cost of private education had escalated to the point that the client faced the choice of removing the children from their schools or facing insolvency.
We were able to help the client avoid either of these alternatives, by enabling the client to release sufficient cash from their pension provision. The consequent annuity which under the rules in force at the time had to be taken simultaneously was available to be recycled with further tax relief back into retirement provision, and the client now enjoys a prosperous retirement.
Funding long term care
A wealthy client, again a solicitor introduction, had to enter a nursing home, and despite the extent of available capital needed above all the peace of mind that would come from knowing that whatever might happen in future to inflation, and in consequence to nursing home fees, the client would never have to move from that nursing home.
We were able to persuade the nursing home to agree that if the client purchased an annuity, set up both to be paid direct to the nursing home (and thus saving tax), and to increase at a guaranteed rate per annum, the nursing home would accept the risk that their fees generally might have to be increased at a higher rate than this amount, and so guaranteed not to increase the fees payable by our client. The cost of the arrangement was mitigated by the consequent reduction in the client’s potential inheritance tax liability.
Planning for future years
Introduced by his solicitor, our client was living in modest circumstances, although he had a reasonable pension and a portfolio of stocks and shares. He was elderly, lived alone and was somewhat resistant to change.
We identified that, particularly as his relations lived at some distance, he needed to plan ahead for provision of long term care in case he were to become unable to care for himself. As then arranged, his capital and income were not then sufficient to meet his needs in that eventuality. We were able to guide him, after some persuasion, to put some protection in place and meanwhile brought some order to his affairs, helping him make use of his various tax allowances, and effectively ‘unfreeze’ his portfolio which, previously untended, had become illiquid.
A few years later he became in need of long term care, and owing to the protection we had put in place, he was able to be looked after at home in style by a live-in carer and his life was transformed. He put on weight and enjoyed his latter years and the company of his carer in equal measure. The arrangement saved his estate £250,000 and his beneficiaries have become clients too.
Reducing inheritance tax
A retired client, referred to us by another of our clients, had made over the majority share in a second country property to their children some years ago, in order to save the family Inheritance Tax. The client later moved into the property full time, thereby unwittingly defeating the original intention.
Having established the full extent of the client’s invested capital, we advised, in co-operation with their solicitor, that the situation be rectified by the client obtaining two professional valuations of what an open market rental should be, and that the client enter a tenancy agreement with the children to pay an appropriate proportion of that rental (based on the higher of the two valuations in order to make doubly sure the Capital Taxes Office would be unable to challenge the validity of the transaction) in respect of the share in the property the client did not own. On the client surviving seven years from the completion of the tenancy the property will fall out of account for Inheritance tax purposes.
Furthermore, by paying the rent in specie viz.by transferring each year an appropriate proportion of the investments to the children the client will achieve further reduction in tax, as any growth in the value of the transferred investments will take place outside the client’s estate.
The Financial Conduct Authority does not regulate taxation or trust advice.
Some 15 years before their intended retirement date, our long-standing client who had been introduced by his accountant had a thriving business and was doing so well that they could contemplate a prosperous early retirement, funded by the sale of their business. We nevertheless persuaded them to make regular tax efficient monthly payments for retirement provision and to allocate similar further medium-term savings towards the cost of private education of their children.
Later on business conditions worsened and their income declined so that much of their free capital, after paying for school fees, was effectively consumed in maintaining their lifestyle. Thanks however to the segregation of their retirement funding, beyond the reach of creditors of their business, they were able to avoid penury in retirement and with our further guidance to provide for underlying guarantees that their pension income would not fall, while preserving the ability for their retirement funds to achieve investment growth.