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Client Stories... Martin and Sally

Couple concerned about possible Inheritance Tax

Martin and Sally are typical clients, Martin has recently retired but Sally thinks she is too young to retire and still works part-time. They have three children, John and Lydia and Sarah, in their twenties and thirties. John has two small children, he has his own business which is beginning to thrive but it’s been a struggle. Lydia is living with her partner in rented accommodation as it’s so hard to get on the housing ladder these days. Sarah has been married twice and is planning to start a family soon.

Martin and Sally have both worked hard over the years and been careful with their money so they have built up considerable assets when you take into account their home, ISA portfolios, pension funds and other investments and deposits. They don’t need much income these days having long since paid off their mortgage and have not yet needed to dip into Martin’s pension fund.

Martin and Sally knew that their estate would be liable for inheritance tax and they wanted to do something about it. When they came to see us they were nervous about giving away large sums of money locking money up in trusts, not able to access it in future. They wanted to help their children, but given past experience they are mindful of what might happen to the money if any of the children were to divorce.

Using cashflow analysis tools we were able to show Martin and Sally the kind of income they were likely to need in the future. We transferred money from the estate into flexible inheritance tax plans which meant after seven years the monies would fall outside the estate. They retained access to annual payments should they need them and the plans allowed loans to be made to beneficiaries. Therefore when lending Lydia a deposit to buy her first home the capital would be protected should she divorce, as the loan would be repaid back to the trust.

In the coming years they could help Grandchildren with Uni fees and use the annual payments for special celebrations, holidays or support for future problems in old age.

Martin and Sally now have peace of mind that they have preserved their wealth for their family but are still able to have access to it if necessary.

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