Mazars Financial Planning have been providing ongoing financial planning advice to Mike and Susan Green, since 2013.
At that time the couple had a significant portfolio of cash deposits and investments, with no overall strategy in place. They had a combined net income which comfortably exceeded expenditure and Mike already had pension provision in line with the Lifetime Allowance.
Mike was looking to purchase a flat in Bristol. His other financial concern at that time was in relation to Inheritance Tax (IHT) and the fact that, in the unfortunate event of the death of himself and Susan, there would be a significant IHT liability to pay. The couple were, therefore, looking to undertake some succession planning for the benefit of their grandchildren. The Mazars LLP Trustee team were able to assist Mike and Susan in arranging up to date wills and also putting power of attorney arrangements in place.
Meanwhile, the Mazars LLP Tax team were able to assist them to set up an appropriate trust to act as a tax efficient means of purchasing the property in Bristol. They advised Mike to pay an ongoing rent to the Trust in order to ensure that there are no IHT issues in the future.
Mazars Financial Planning have continued to work with Mike and Susan and have been gradually implementing a strategy to mitigate IHT where possible and maximise general tax efficiency and overall investment returns. Following our recommendations, Mike has invested in a number of Enterprise Investment Schemes which have provided him with 30% income tax relief and are also IHT-free after two years (as they then benefit from Business Relief). These investments also allow him to defer any capital gains tax liabilities.
Although Susan is retired and has no earned income, we were able to advise her to make tax-efficient pension contributions of £3,600 per annum gross. We also advised Mike to make the same level of contribution for each of his grandchildren. This, as well as his ongoing funding of their education costs, is a further way of reducing the value of his estate. Mike and Susan also had a number of ISAs with various providers. Having carried out a full review of these investments, we concluded that it was appropriate to consolidate them into a new portfolio that is cohesive and related to their risk profile and objectives.
We also recommended and arranged a life assurance policy for Mike and Susan for IHT protection. This policy effectively covers their current IHT liability and gives then a number of years to continue to work on the overall mitigation strategy, which is the next part of our planning.