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Case Studies

Inheritance tax and investment planning case study.

Step 1 Understand and prioritise goals and objectives – Two recently retired lecturers were introduced to me. They had accumulated over £950,000 in savings and inheritances over their lifetimes. Their main priorities were to maximize investment returns and structure their affairs to minimize the inheritance tax liability payable on their deaths.

Step 2 Gather client information – The existing investments were spread between arrange of providers. We obtained up to date valuations and full details of existing investments including date and cost of acquisition, performance and tax wrapper used.

Step 3 Analyse client information – We assessed the potential inheritance tax liability on first and second deaths. We analysed the performance of existing investments and assessed the potential benefit of retaining them, and benefits of encashment. We assessed the tax implications of all options considered.

Step 4 Recommend a suitable plan – We put in place a plan which reduced their potential inheritance tax liability on second death from £456,000 to £256,000. The plan involved rewriting wills, setting up trust funds for their children and grandchildren, and reinvesting funds.

Step 5 – Implement Strategy – Arranged for their wills to be rewritten to utilize all available reliefs. Two discretionary trusts were created for the benefit of their children and grandchildren, into which £240,000 was gifted and invested. Existing ISAs and PEPs were consolidated onto one new platform which gave clients access to many of the best performing funds in the market.

Step 6 – Regular reviews – Investments were reviewed six monthly to help to ensure they were performing to best advantage. Reliefs and allowances were utilized.

Pension and investment planning case study.

Step 1 – Understand and prioritise goals and objectives – An existing client approached me for a pension and investment review. After leaving his job as a company director, he had recently become self employed. He had accumulated a number of pensions over his working life together with ISA investments with various banks. He had recently received a lump sum of £110K from the sale of share options. His priorities were to maximise return from pensions and investments and consolidate them into one place to make them more manageable.

Step 2 – Gather client information – The first step was to establish a full log of the clients’ existing investments. We obtained up to date valuations and full details of existing investments including date and cost of acquisition, performance figures and tax wrapper used.

Step 3 – Analyse client information – We assessed existing investments and pensions paying particular attention to investment options, charging structure and performance. Reviewed different ways in which client could invest money for tax efficient growth for the medium to long term.

Step 4 – Recommended Suitable Plan – We consolidated all pensions and investments on a single provider’s platform. This enabled the client to easily manage his investments in one place, giving access to over 1000 funds, and a competitive charging structure.

Step 5 – Implement Strategy – We transferred various pension schemes and ISAs into a single investment platform. We invested £100K from clients’ cash deposits in the same platform. The money was invested in a range of 15 funds, in various asset classes in keeping with the clients’ attitude to risk.

Step 6 – Regular reviews – We arranged six monthly reviews to ensure funds are performing well and in keeping with clients attitude to risk. Reviews include utilizing annual ISA allowances and making additional pension contributions.

Portfolio Buy to Let case study.

Step 1 – Understand and prioritise goals and aspirations – We were approached followed an existing client recommendation to discuss funding options. Clients’ main priority was to invest profits from his trading business in property to give him financial independence from his business.

Step 2 – Gather client information – We established the clients’ existing liabilities and businesses to establish the amount of capital that could be used to fund property deposits. We discussed whether investing in buy to let properties would be in keeping with the clients’ attitude to risk.

Step 3 – Analyse client information – We discussed different types of properties including property yields, potential capital growth and resale ability. Discussed a range of buy let finance options, of varying loan to values and deal types.

Step 4 – Recommend Strategy – We recommended a portfolio buy to let product, allowing the client to borrow money on a number of properties from a single lender. This resulted in a simpler application process and allowed the client to have a single ongoing relationship. It also allowed him to build up a capital reserve which could be drawn down easily in the future.

Step 5 – Implemented strategy – We applied to the lender for mortgages on several properties Provided interface between client and lender, which involved providing proof of income by way of accounts, together with helping arrange access via the estate agents for the valuers. We processed mortgage applications to offer.

Step 6 – Regular reviews – Dealt with client periodically to expand his property portfolio. Arranged to review mortgages once current finance deals had expired.

Mortgage case study.

Clients were approaching the end of their fixed rate repayment mortgage deal and needed to identify all options available. They required the least expensive fixed rate arrangement over a three year period.

A full analysis of monthly expenditure showed a consistent monthly surplus

The options available from the existing lender and the associated costs were established and compared with a full market analysis which confirmed the least expensive arrangement.

A recommendation was made to remortgage with an alternative lender because this offered the least expensive solution when all costs were taken into account.

This was agreed and all information and documents were collected to enable the application to be made. The case was then monitored and progressed to completion.

Protection case study.

A young professional couple with a joint repayment mortgage and two young children requested a review of their protection needs as they had no plans in place.

A comprehensive analysis of income and expenditure showed a sufficient surplus to address these needs.

The first consideration was to protect the income of the main wage earner. It was possible to recommend a policy which would pay fifty per cent of salary after twenty six weeks should he become unable to work due to sickness or accident up to age 65.

Also decreasing term assurance policies were recommended to repay their mortgage should either die or suffer a critical illness during the mortgage term.

Having put in place these two protection policies, the subject of general financial protection was considered.

If either client died or had a critical illness, although the mortgage had been repaid, how much income would the bereaved spouse receive.

It was decided to recommend separate, supplementary life and critical illness policies to provide a lump sum which could be invested to produce added income until the elder child was aged twenty five.

Illustrations for each recommendation were produced and agreed and the respective applications completed and submitted.

These applications were monitored through the underwriting stage and then submitted.

The content of the case studies is for information purposes only & does not constitute as Financial Advice in any way.

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