'Look after my girls'
Chris Bibb, Chris Bibb IFA
In 2010, a terminally ill man was referred to Dorset-based adviser Chris Bibb, an appointed representative of Strategic Solutions. He was 52, had a wife aged 50, and two daughters, 20 and 16. His brief was simple: 'Look after my girls.'
"He was a high-flyer with a generous final salary pension that had a partial cash equivalent transfer value of £1.64 million", says Chris.
"We transferred this amount to a SIPP and, after receiving medical evidence, the provider agreed to the payment of a serious ill health lump sum. The client realised £1.14 million in tax-free cash and his wife had £500,000 protected rights in the SIPP accessible on his death.
"We invested all bar £350,000, which was used to buy a holiday home near the sea. He died in January 2012. His widow lives off the income from the investments. She subsequently gifted their daughters a collective £410,000 and they are both now on the property ladder, owning £770,000 in property, and still have £1.4 million in savings and investments between them.
"A tragic story, but so far the advice has benefitted the family in extra income and assets to the tune of £1.3 million. Naturally, over time that figure should be much, much higher."
'It was an area she was reluctant to discuss'
Chris Longman, Hanbury Wealth
Inheritance tax planning stands to save the beneficiaries of a 77-year-old client of Hertfordshire-based Hanbury Wealth around £48,000.
"She was aware that her estate would be subject to a significant tax charge on her death, and admitted that until now it had been an area she was reluctant to discuss," says adviser Chris Longman.
"Initially, we conducted a lifetime cashflow analysis to define at which point she would run out of money, if ever, and then to agree how much she would be comfortable with moving out of her estate.
"Her portfolio was categorised as being low to medium risk. After the cashflow analysis, we discounted the use of a trust as the client wanted to retain access to her funds and, given her age, didn't want to start the seven-year clock running. We also discounted the use of a protection policy as the cost was prohibitive.
"Cashflow analysis helped to establish that an ISA holding worth around £120,000 could be invested in a higher risk environment without any future detriment, with the residual low to medium-risk monies being ring-fenced as her core, accessible portfolio. We reviewed the AIM investment market and selected an appropriate provider for her ISA, which will be exempt from inheritance tax within two years."
'Her priorities were to educate her daughter and retire comfortably'
Kay Ingram, LEBC Group
Almost 30 years ago, an expat returned to the UK following a divorce. "She had enough to buy a flat but not much else," said Kay Ingram, a chartered financial planner at LEBC Group in London. "She had paused her career to follow her ex-husband's job abroad."
Her priorities were to find a job, educate her daughter and retire comfortably. Now age 75, she is retired and lives comfortably on her pensions. A homeowner, she supported her daughter through university, funded her grandchildren's school fees and has substantial savings which she is leaving tax-efficiently to her family, without sacrificing her own standard of living.
Over the years, LEBC has advised on a number of areas from updating her will and unearthing old pensions to explaining the packages of competing job offers. We have also advised on the tax treatment of income when working abroad and using a deed of variation to set up a trust for her daughter's education with the proceeds of an inheritance. As her grandchildren were born LEBC established a plan to pay their school fees.
"Advice has value, not just for the already wealthy, but for those who, against the odds, aspire to financial security," said Kay "It's not necessary to have six figures to invest to be able to access advice."