Case study: inheritance tax
(Adviser: Mark Livesey)
Client A had an inheritance tax problem on her death of approximately £500,000. This client had various capital assets and a steady income from pensions and property.
This client had a substantial amount of money on deposit and was only achieving a modest net interest rate of 3%.
The client was extremely concerned about the amount of inheritance tax which the children would have to pay on her death and did not require access to certain items of her capital assets. However, client A did want in return some form of income to ensure that any long term care costs could be met.
The client was happy to take a cautious/medium degree of risk and I applied these factors in determining my recommended course of action.
In this instance, I recommended an investment bond spreading the money between various asset classes to achieve a cautious investment approach.
However, the most crucial point is that this investment was placed into a discounted gift trust, which provided the client with a regular income for the rest of her life with a prospect of out performance of the investment funds chosen over and above the deposit base returns she was previously receiving.
Under the discounted gift trust, part of the investment amount was immediately outside her estate with the balance of the investment being completely outside of her estate after a further 7 year period.
This therefore achieved the client’s priorities:
- Reduce her inheritance tax liability
- Flexible Trust Planning
- Regular Income
- Investment Choice
Therefore, by utilising our advanced fund research tools and our expertise in investments and inheritance tax planning, Client A was left extremely satisfied with the outcome.