Following the passing of her husband, Amanda needed a professional partner who could help her make sensible planning decisions going forward. This included advice in relation to investment management, inheritance tax planning and her potential future income and capital needs.
Amanda, 72, contacted us as she was concerned about her estate’s potential Inheritance Tax liability. She wanted to ensure she could leave as much to her children and grandchildren as possible whilst retaining a suitable portion of her invested capital, valued at £4.5 million, to meet her future capital and income needs.
Amanda and her husband had always made financial decisions together, however it was her husband that had dealt with the day-to-day management of their investments. This meant Amanda had lost not only her financial sounding board and partner but also her investment manager. It felt like now was the right time to approach a professional firm that could help with these two elements of her planning. She was also aware that her estate would have a significant Inheritance Tax liability to pay on her death. This was something that Amanda and her husband had planned to tackle but had never quite got round to. Amanda’s main aim was to reduce the tax burden on her estate so that her children and grandchildren could benefit as much as possible.
We first needed to establish what capital Amanda required to fund the remainder of her lifetime. Once we had established this figure using cash flow modelling, we left a healthy margin for error and then focused on investing this capital in a suitable manner. This included allocating capital into Taylor Money’s in-house investment strategies.
We then turned our attention to the capital that was in excess of Amanda’s lifetime requirements. We arranged a joint meeting with Amanda’s solicitor and tax adviser to discuss tax planning opportunities. As a result, we were able to advise on establishing a gifting plan which included cash gifts to her children and then setting up Junior ISAs, pensions and a discretionary trust for the benefit of the grandchildren. The purpose of these structures was to strike a balance between Amanda seeing her family enjoy and benefit from this capital now, whilst also ensuring the timing and amounts were appropriate for the various ages and stages of life of her family.
The plan we set out would ultimately reduce Amanda’s estate’s Inheritance Tax liability by 50% over the next 10 years. This provided her with peace of mind that she had taken positive action towards tackling an element of her financial planning that had been an objective of not just her, but her late husband as well. We continue to work closely with Amanda to manage both the capital she retained and that which she gifted.
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