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Future Planning Wealth Management has expert knowledge and systems in place to work with clients in helping to protect their assets and make sure that when money is needed, it is available.  This client was referred to us by a local solicitor firm who wished to know that independent financial planning with cashflow analysis would be provided with the client's best interests at heart.  

Client scenario:

• Female, divorced, aged 55 and one financially independent adult son 
• Poor health with unknown life expectancy 
• Inherited large sum of money relative to current situation requiring expert cashflow planning 

Assets:

• Residential home valued at £300,000 and no mortgage 
• Pension received from previous divorce settlement of £28,000 
• Benefit income received (means tested) 
• Inheritance received of just over £1,000,000 

Concerns on behalf of client:

• Making sure that client remains financially solvent with benefits likely to cease soon 
• Discussing Inheritance Tax (IHT) concerns for one children
• Create cashflow forecast detailing how all costs can be covered including in-house care assistance 
• Time - need to complete work quickly as income is ceasing 

Some of the work involved:

Power of Attorney existed for the client and therefore were dealing with the son. Once all information was obtained, and goals were understood, we then ran the number crunching exercises, working through income and outgoing requirements and calculating the most tax efficient route on behalf of the client.  Risk Questionnaires were completed and in-depth discussions regarding "capacity and tolerance for loss" were held.  Different models were created to show alternative approaches and the recommended route.  

Understanding the nature of all current income was important, to ensure whether all pension income was guaranteed or not, increasing or not and also what would happen in the event of one client passing away, as one client had more income than the partner. Seeing what plans were in place for repaying the buy to let mortgages, and if selling properties then how this would affect cashflow and lifestyle with reduced income, as there would be less rent then coming in.

Solutions: 

We presented a clear picture of both what the current position looked like and future position will look like, including ensuring that the client was going to meet her considerable expenditure including care fees.  We planned for tax efficiency as well to ensure that more was able to be paid as an income.  We managed to: 

• Create a cashflow forecast showing what will happen to the inheritance over time 
• What the potential Inheritance Tax (IHT) position looks like for the son and how to safeguard against this 
• Quickly gain satisfaction with the trusted solicitor firm as having carried out sufficient care of duty for the client 
• Implement an income quickly 
• Keep the inheritance in a low risk environment and therefore enable there to be no worries for the client and her son 

As a result, we showed the client how these changes meant that there would be:

• An income to meet requirements 
• A portfolio created specifically for the client and managed on a bespoke basis 
• Less inheritance tax to potentially pay for son 
• Care fees able to be covered without worry of money running out too soon 
• A low risk, value for money portfolio 
• A tax efficient portfolio 

The son was happy with the outcome, as was the mother and the sensitivity with which the work was carried out in. The solicitors were pleased with the speed and professionalism and have since used our services again.  We have maintained the value of the investments to date, despite considerable withdrawals.  

There are many varying factors to consider, different allowances and vehicles to assist with scenarios similar to the above. No two cases are the same and if you feel you are in a similar position to the above, you are welcome to send an enquiry through whereby we can discuss if we are able to add value to your situation.