Estate Planning Guide

4 years Wealth Preservation Accounts Anna is keen to reduce the value of her estate but is nervous about giving up access to her money as she is unsure about the level of access she will need in the future. Benefits Flexibility • Anna is able to invest money and retain the right to the maturity benefits • The access can be structured to meet Anna’s known expenses or just in case she needs funds • Trustees are able to distribute money to a beneficiary as required Inheritance tax • The growth accrues outside of Anna’s estate and does not fall in her estate for IHT purposes. • The initial gift is outside of Anna’s estate after 7 years, meaning no IHT when she dies Uses • Mitigating IHT whilst allowing access to funds • Providing additional funding in retirement Anna invests £100,000 into the Wealth Preservation Account (WPA) The remaining policies can remain invested and the trustees can control the maturities and distribution of benefits. The Account consists of 50 policies , each with a specific maturity date. At outset she selects the maturity dates for each of the policies. Anna chooses to spread them evenly over ten years to allow the trustees to release money to her, if she needs, including any growth. Anna needs money to put towards a car so she asks the trustees to allow two policies to mature. Year 4 Year 7 During year seven, her daughter, Sarah, leaves home to go to university and the trustees are able to support the fees for this by appointing five policies to Sarah who then surrenders them. The trustees repeat this for the next two years until Sarah graduates. 2 The maturity dates of the remaining policies due to mature that year are deferred for a further ten years. 5 Life limited individuals and BR Lawrence has recently been diagnosed with an illness and has been informed that his life expectancy is less than four years. He is divorced with two adult children, and is only 55. He wants to put in place arrangements to ensure that the assets that he has built over his lifetime can benefit his loved ones and his medical expenses are covered. Lawrence wants an IHT mitigation solution that allows some flexibility and access to additional capital if required £400,000 moved into Blackfinch Adapt IHT Portfolios BR investments achieve 100% IHT relief Lawrence dies after these four years when the total value of his taxable estate is £300,000. This falls below the NRB, so no IHT is due – a saving of £150,000. All or part of the money will be accessible for medical expenses should they arise (as a regular income or as a lump sum). BR SHARES Lawrence spends his cash and ISA funds Lawrence allocates his cash and ISAs for living and medical costs for the next four years BR investments generate capital growth 71 CASE STUDIES Lawrence’s estate: £700,000 Living and medical costs Taxable estate: £375,000 If left uninvested, IHT payable at 40%: £150,000 ISAs £50,000 INVESTMENTS £400,000 CASH £100,000 HOUSE £300,000 2 years 100% IHT relief