What prompted Mr Booker to contact us?
We were contacted by Mr Booker’s son following the death of his mother.
Mr Booker’s late wife had been wealthy; but she had undertaken very little estate planning. This meant all her assets had been left to Mr Booker, leaving him in a comfortable financial position, but with any beneficiaries to Mr Booker’s estate facing a large Inheritance Tax (IHT) bill.
Following the death of his wife, Mr Booker had also decided that now was the right time to sell the home they had shared together. He had already decided that he would move into an assisted facility, at a significant annual cost.
Mr Booker was keen to understand whether his existing pensions, savings and investments would provide sufficient income to meet the facility’s fees, while still allowing him to meet his other expenses.
He and his son also wanted advice on how to best reduce any IHT due in the future.
What did we recommend?
The sale of Mr Booker’s house boosted his cash reserves significantly.
Our job was to ensure that his pension and income from other savings and investments, would be sufficient for his needs.
We produced a financial forecast to confirm that he did indeed have sufficient income and that, with careful management and prudent assumptions, he wouldn’t erode his capital base.
Once that was proven, we could move on to tackle the IHT issue.
We considered several options, including making gifts. However, Mr Booker didn’t feel comfortable giving away capital, which he couldn’t request back in the future.
Following a thorough fact-finding process, we calculated the amount of IHT due on Mr Booker’s death. We then recommended Mr Booker make two investments which qualified for Business Property Relief (BRP) and as such, would be outside of his estate within two years. These investments remain in Mr Booker’s name, allowing him full access at any point in the future, should that be necessary.
We also recommended Mr Booker make a new will.
How did Mr Booker and his son benefit?
Mr Booker approached us at a very difficult time in his life.
Our financial plan gave him valuable peace of mind that he would be able to continue living in the assisted facility and meet his other expenditure, without eating into his capital.
Providing Mr Booker survives for two years, our estate planning advice will eliminate the IHT which would have been payable on his death, resulting in a significantly larger inheritance for his son.