#WealthGoals: Protecting loved ones and defending your post-death legacy

Given current circumstances, clients are considering the impact of morbidity and mortality. What impact does this have on their family and business? Here, Steve Pennington, Head of Wealth Planning at Arbuthnot Latham, illustrates this with a recent case.

The situation:

Mrs A’s husband passed away and it took her a couple of years to come to terms with his loss. Mrs A was the sole owner of a commercial property company worth c.£5.6 million and had other personal wealth of c.£8.6 million. Mrs A didn’t have the appropriate relationship team at her previous bank to support her during this time. She was not very financially aware because her husband took care of the finances and relied heavily on her accountant who was her trusted adviser.

Mrs A had lost a financial planning opportunity because her previous wealth planner missed an important conversation with her about how the pension options from her late husband’s pension could make a material difference on her legacy plan. This got Mrs A thinking about her own financial plan.

Mrs A had lost a financial planning opportunity because her previous wealth planner missed an important conversation with her about how the pension options from her late husband’s pension could make a material difference on her legacy plan

After building trust through our various consultations, we took Mrs A on an educational journey to understand her full circumstances, objectives and preferences and to identify her needs.

Mrs A wanted the security and peace of mind that she would have enough income to sustain her lifestyle over her lifetime, and that she had a proper legacy plan in place to protect some of her estate for her son and grandchildren.

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Top Tip

It is only too human to put off legacy planning; over half of Britons do not have a will in place. But this not only adds confusion to a distressing time, it also means losing myriad opportunities to reduce tax liabilities on your estate. A wealth manager can help you quickly get a plan in place that will ensure as much money as possible stays with your loved ones, so why not let us arrange a no-obligation discussion with an adviser today?

Lee Goggin - Co-Founder

Lee Goggin

Co-Founder

The solution: 

Mrs A was intelligent, grasped easily the key issues, and wanted to talk about her long-term financial plan.

We used a sophisticated and interactive lifetime cashflow tool to help Mrs A visualise, identify and consider possible solutions which would allow her to achieve her financial objectives.

We used a sophisticated and interactive lifetime cashflow tool to help Mrs A visualise, identify and consider possible solutions which would allow her to achieve her financial objectives

We talked to her about the impact of potential direct gifts to her son, including vintage cars (that was her late husband’s passion). We are also having round-table discussions with her tax adviser about gifting the company shares to her son.

We also talked about her initial liquidity need and drawing down on her different “pots” as part of her decumulation strategy. While she could have looked to her Arbuthnot Latham portfolios, it was important for her to understand that she could consider her other investments and utilise her Capital Gains Tax losses in other portfolios to raise liquidity.

We pointed out some key mathematics which were twofold: What was her current potential Inheritance Tax (IHT) liability should she die now aged 76? What would it leave her beneficiaries? Once she understood that and understood the impact of IHT, the conversation really came alive!

Mrs A was facing a potential Inheritance Tax liability of £5.6 million, leaving a legacy of £9.3 million, which meant that HMRC would be a significant beneficiary of her estate.

We pointed out some key mathematics which were two-fold: What was her current potential Inheritance Tax (IHT) liability should she die now aged 76? What would it leave her beneficiaries? Once she understood that and understood the impact of IHT, the conversation really came alive! 

By having the appropriate gifting strategy discussion, retaining the maximum amount in her pension and completing a pension death benefit nomination form, and protecting her legacy by having a guaranteed whole of life policy in trust to mitigate partially her IHT liability, Mrs A’s projected Inheritance Tax position was reduced and there was a much larger legacy pot for future generations.

The results:

We have achieved trusted adviser status for this client and Arbuthnot Latham are looking after her banking, investment and wealth planning needs; we are now “holding her hand” as a trustee, investor and somebody who is going through a financial journey with a business inherited.

The client is reassured that, as her advisers, we are here for the long term and we are well placed to address any changes to her financial planning needs for many years to come. 

Does this case study resonate with you?

findaWEALTHMANAGER.com says:

Case studies can be an invaluable way to quickly see how a wealth manager has helped people similar to you. While details will of course remain anonymous, a prospective adviser should have abundant illustrations similar to this they can share.

If you have a specific pension planning question or feel the time is right for a thoroughgoing financial review, arrange to meet your best-matched advisers quickly and easily through our 3-minute search tool. Alternatively, please get in touch with our expert team to discuss your requirements further.

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