BR Guide FINAL 20 Feb

49 CASE STUDIES They now have two financial planning needs: COMBINED ANNUAL INCOME £165,000 EXPENDITURE £40,000 PENSION CONTRIBUTIONS £80,000 ISA CONTRIBUTIONS £30,480 INVESTABLE INCOME £14,520 BR INVESTMENT ANNUALLY £10,000 GROWTH P.A. 5% AFTER 10 YEARS* £148,648 *GROSS OF FEES AND TAXES, ASSUMING THE INVESTMENT IS MADE AT THE START OF EACH YEAR PLANNING SUMMARY SCENARIO: Graham and Stephanie are in their late 50s, still working in good jobs, have paid off their mortgage, have adult children, and with their pension savings and ISA portfolio in place, they have some spare capital to invest from their income for the first time. SCENARIO: Maria, an elderly lady with an estate worth £600,000 has lost capacity and is unable to administer her own finances, but she has always wanted to pass on as much of her wealth to her children as possible. INVESTMENT GROWTH COMPATIBILITY WITH POWER OF ATTORNEY Smaller company investments that qualify for BR after two years offer solutions to both. BR Qualifying BETTER RETURNS AND SOME DIVERSIFICATION AWAY FROM THEIR MAINSTREAM PORTFOLIO START TO BUILD UP SOME IHT EXEMPT ASSETS BR Qualifying Anthony, Maria’s old business partner, is the attorney for her Lasting Power of Attorney (but not a beneficiary of her will) £600,000 PROPERTY SHE LIVES IN (£300,000) Maria’s estate: CASH (£100,000) SHARE PORTFOLIO (£200,000) + = + When looking at IHT planning for Maria’s estate, Anthony must ensure that any investment decisions are made in Maria’s best interests and won’t disadvantage her, for example, by making her money inaccessible (e.g. by making large gifts). AFTER CONSULTING HIS ADVISER, HE REINVESTS MARIA’S CASH AND £75,000 OF HER SHARE PORTFOLIO INTO BR QUALIFYING INVESTMENTS* WITHOUT THE NEED FOR UNDERWRITING OR A MEDICAL *As Maria is making investments (in her own name) and not gifts, this is permissible where an LPA is in place. The adviser noted that Maria’s NRB of £325,000 is available and her house should qualify for at least £100,000 RNRB even if she dies in early 2018. That leaves £175,000 of her assets exposed to IHT. CASE STUDY 6 CASE STUDY 7