Bucket Case No. 1
Happily retired and comfortably off
John and Jane Well-Off were retired and although instinctively they knew they had more than enough income and assets to support their own life, they also knew that a large part of their estate would end up with the taxman.
Not only did they have plenty income through their generous final salary pension schemes, they had also accumulated £600,000 in various investments and savings accounts. John and Jane also owned a house with a value of £300,000.
John and Jane came to Brett Investment seeking investment advice.
We spent time with them, getting to know what they wanted to do with their rest of their lives. We then established the cost of their desired lifestyle in retirement and this is what we found: Based on prudent assumptions and allowing for inflation and the potential cost of future nursing care, John and Jane were never going to run out of money. In fact, their wealth was only ever going to grow.
John had already mentioned in our conversations that they did not wish to pay the Chancellor any more tax than they needed. The problem was that if both died now their Inheritance Tax bill was over £100,000! With a growing estate this bill would only ever get bigger!
Using our BettrPlanning approach and using powerful financial planning software (The Bucket), we were able to establish how much income and capital was actually surplus to John and Jane’s needs.
In effect, we worked out how much they could afford to spend annually and how much they could afford to gift away without the fear of ever running out of money.
As a result, John and Jane then set up a ‘family trust’ arrangement and are now on course to eliminating their Inheritance Tax liability.
John and Jane’s investments were also transferred into our BettrInvestPortfolio, which reduced their investment costs, improved their diversification and gave them a higher probability of achieving a successful investment outcome.
This leaves John and Jane with the security and peace of mind that they can live the kind of life they want whilst gradually passing on their wealth to their family instead of to the taxman.
Michael Confused owned his own business, but quite frankly he had had enough. Work was no longer enjoyable and Linda, his wife, was about to retire, so he wanted to know if he could too.
The trouble was that although he had various investments and pensions, as well as a business to sell, he didn’t know if it was going to be enough for him and his wife to lead the kind of retirement they had always envisaged.
Essentially what he wanted to know was how big his bucket needed to be.
Bob and Alice Can-We-Spend-It had been retired for a couple of years. They had always dreamt of retirement and the things they’d do together and the places they would see.
The trouble was, they were worried about spending too much, too early, and not having enough for their later years.