Client Stories

Making the best use of accumulated funds after stopping work.

The only near certainty about the future is that things will change. A key part of this financial plan is its inbuilt flexibility, so it can be adapted as needed; accordingly, our regular reviews are an essential part of our service.

Background

Dave has been our client for many years. He is married with two children and has owned a successful business.

Over the years we have helped Dave accumulate a decent sized pension pot, in addition to which he had investments and cash deposits dotted around, all adding up to further sizeable sum. Dave retired in his early 60’s following the sale of his business.

Dave’s wife, Pauline, had not worked for many years and so had virtually no entitlement to state pension benefits in her own right. Dave and Pauline had no mortgage, or other liabilities, nor anybody financially dependent on them, as their two children were adults and developing careers in their own right.

With his salary and bonuses ceasing quite suddenly, Dave was keen to ensure his accumulated wealth worked hard for him and his wife, to maintain their chosen lifestyle, whilst minimising their tax liability. Although they intended to leave a decent inheritance for their children (and hoped for grandchildren), this was not a high priority for them, although they planned to make decent contributions to their children’s’ future wedding and housing costs along the way.

What we did…

Firstly we established that the annual living expenses to be drawn down from Dave and Pauline’s accumulated wealth were affordable and realistic, even at something in excess of £75,000 annually.

We then agreed a dynamic financial plan taking into account short, medium and longer term financial goals, attaching an investment risk budget to each.

As Dave’s pension plan was by far his single largest financial asset, we redistributed ownership of Dave and Pauline’s other assets between them, in order to make full use of personal tax allowances and exemptions. With no capital debts to be repaid, there was the advantage that Dave was able to take his tax-free lump sum from his pension plan in stages over a number of years.

In the space of only two years we achieved the creation of a more deliberate structure for Dave and Pauline’s shared wealth, held in a number of differing forms, each with its own tax treatment, ranging from pensions, ISAs, investments and deposits held both directly and in trust and bond structures.

Each year, we review the performance of these investments and decide from which of the vehicles to draw the annual income, in the most tax-efficient manner.

  • A large part of Dave and Pauline’s annual income is not subject to tax and unless the structure of UK personal taxation changes significantly, this will continue to be the case.
  • Neither Dave nor Pauline should ever suffer personal tax rates greater than basic rate income tax, or lower rate capital gains tax.
  • They retain penalty-free access to capital, should it be required for their own purposes, or to help pay for weddings, or give financial support to their children.
  • Their assets are invested and managed fully in accordance within the agreed objectives and risk tolerances.
  • Working with a solicitor, who has redrawn their wills and trusts, we have ensured whatever they do leave behind not only suffers as little inheritance tax as possible, but is used for the purposes Dave and his wife would prefer.
  • Dave and Pauline have also drawn up fresh Powers of Attorney to ensure their plans and aspirations will still be met even in the event of incapacity.

If you would like to know more about our services or how we can help you, please contact us, [email title=”Email RCL Consultancy”]email us[/email] or send your questions via our enquiry box on the right hand side.

Leave a Reply