Michael and Sarah

A change of perspective leads to a more secure future

Michael and Sarah approached our team after their previous financial advisor retired and they wanted to review their investments to account for their age and health. Their objective was to ensure that their complex financial arrangements met their current needs, as well as the needs for their family in the future.  After some research, Michael approached our team to take a look at their investments and see how they could be rearranged in the most tax efficient manner.

 

Our approach

We understand that everyone’s needs are different, and, in order for us to truly tailor our service, we sat down with Michael and Sarah for a discovery meeting. This was an opportunity for us to find out  what was important to them, and to understand their values, goals and aspirations along with any of their concerns.

Our initial meeting revealed that Michael and Sarah were unsure what inheritance tax would be due on their estate and whether they had both updated their wills.

After learning more about their financial position, it became apparent that a large inheritance tax issue had never been addressed. The estimated tax bill based on their assets and structure of wills meant their estate would be liable to around £2.4m of inheritance tax.

After highlighting the potential tax issue, we suggested that a full financial review would be beneficial. We agreed to gather all their personal and financial information and present back to them how this looked from a balance sheet perspective and tax position.

 

Our tailored solution

After a vast exercise of gathering all of the data, we completed complex tax calculations to determine what investments could be sold and the impact this would have. It was important to weigh up the pros and cons of selling the investments versus not doing anything, and potentially risk their family paying a large amount if they were to sadly pass away.

We presented back our findings and invited Bowcock & Pursaill Solicitors to attend the meeting, where they discussed Michael and Sarah’s current wills and the options that were available to them so they could go ahead and get their wills updated. By combining our advice and the effective new wills, we were able to demonstrate a considerable tax saving.

We followed this up with a strategy meeting to discuss our advice with Michael and Sarah, ensuring they understood everything at each and every step of the process.

We advised them to keep hold of their pension funds as they were exempt from inheritance tax, and retain a cash holding to help with buying a new house as their existing one was blighted by HS2.We then agreed to sell all the remaining investments and pay the capital gains tax liability. The income tax charge created from the sale of some of the investments was offset using Venture Capital Trusts (VCTs).

 

The net proceeds from the sale less the VCT investments were placed into Asset Backed Business Property Relief Investments. If these investments are held for at least 2 years at the date of death, they will be zero rated for inheritance tax.

 

The results

We talked through all of Michael and Sarah’s concerns and discussed possible solutions from any unexpected events giving them the chance to discuss their options.

Michael and Sarah both agreed to go ahead with our recommendations. After restructuring their affairs and providing they live to March 2024, they will save c£2.4m in potential inheritance tax. They both were extremely pleased with this outcome and certainly felt more confident that their high-level finances were now in hand.

 

Our ongoing support

After we agree a plan of action with our clients, we have regular ongoing reviews to ensure their resources are always pulling in the right direction. WE are here to make your wealth matter, and make the process as easy as possible for you.