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CASE STUDY
Estate Planning
CLIENT PROFILE - Estate Planning
Jeremy & Mandy are in their late 70s and have the following estate position:
They are well supported by secured pension income and meet their additional expenditure needs by drawing £20,000 pa from their drawdown pensions.
OBJECTIVES & QUESTIONS
Jeremy & Mandy wish to explore the following:
Q1) Understand their existing and potential future inheritance tax (IHT) liability
Q2) Understand mitigation strategies that could provide a legacy for future generations whilst maintaining financial independence
BESPOKE
Case Study assumes Jeremy and Mandy have full use of their nil-rate & main residence nil-rate bands. Pensions are deemed outside of their estate.
We calculated their existing inheritance liability sits at £400,000. We were able to project this liability forward using our sophisticated modelling software.
Our model, based on the used assumptions, anticipated that in ‘real terms’ their IHT liability would increase to c. £530,000 at estimated mortality ages.
COMPLETE PLANNING
SYNTHESIS ADVISED IN THE FOLLOWING AREAS:
We demonstrated various methods to help meet their objectives . This included insurance policies, IHT efficient investment vehicles and outright gifting options.
RECOMMENDATION
We recommended a trust based invested solution with an initial settlement of £325,000.
This settlement would be exempt from IHT after 7 years and provide an eventual IHT saving of £130,000. By placing the assets into trust, we ensured that all future investment growth was also outside of their estate.
We established a 7-year life assurance policy for £130,000 to provide life cover to coincide with the period prior to the settlement becoming exempt.
We created an ongoing regular gifting strategy to utilise annual gifting exemptions. We also utilised the estate planning advantages of pensions and switched all withdrawals over to their investments.
Our analysis demonstrates that these steps could provide IHT savings of c. £254,000.
Assumes in the first 7 years £130,000 of IHT is offset by 7-year life assurance policy.
ABOUT THIS CASE STUDY & RISKS
ADVICE | The information which is summarised in this case study does not constitute financial advice and is general in nature. It does not account for your specific circumstances and should not be acted on prior to receiving formal advice from Synthesis Connected Wealth Ltd. If you were to act without receiving advice you risk entering into a strategy and/or product that may not be suitable for your needs.
TAX ADVICE | The Financial Conduct Authority does not regulate tax advice.
INVESTMENT RISK WARNINGS | All investments, which we may undertake on your behalf, are subject to a level of risk. The value of investments and the income derived from them is not guaranteed and can fall as well as rise.
FACTUAL ACCURACY | This case study is based on a fictitious client and has been constructed to provide an example of our planning techniques.