Case Study Details
Name Case Study 4 Date 07 June 2016 Categories lifestyle   Author Ethos

Case Study 4

A widowed client had been left a sizeable estate when her dear husband passed away. Our client was recommended to us by her solicitor as she required a lot of financial and emotional support.

We suggested that her daughter was in attendance at all meetings and was part of the decision making process as we considered our client should be treated as a potentially vulnerable client.

Our client wished to have the best possible care in her own home and wanted to ensure that her capital was used to fund whatever care was required. Her concern was that her family would be faced with sizeable inheritance tax bills upon her death but she didn’t want to give money away during her life time in case it left her short of funds to pay for care.

We thoroughly reviewed her financial affairs and ascertained the cost of care packages provided by reputable care in the home agencies and then created strategic solutions that offered access to additional funding to cover future care costs wrapped within a combination of flexible trust plans and other Inheritance Tax saving plans that materially reduced her potential IHT liability upon her death after both 2 and 7 years.

Our client has peace of mind and is contented being cared for in the comfort of her own home and happy in the knowledge that her family will receive a high proportion of the asset built up over many years of hard work by her and her late husband.

A longstanding client in his later working years had a very senior management position and was subject to higher rates of income tax. He had also accumulated with his wife sizeable personal assets.

Our client’s objective was to try and reduce his large income tax bill and was concerned that in years to come the next generation would potentially see the loss of family money by way of Inheritance Tax bills. At the same time he was not prepared to lose access to capital over the longer term.

We reviewed his and his wife’s financial affairs and recommended a solution to both his objectives and concerns. The client invested a capital sum into what is known as an Enterprise Investment Scheme (EIS) geared primarily for capital preservation. On approval by HMRC the client was able to claim an Income Tax refund of up to 30% of the investment made into the EIS and the investment was considered as outside of his estate for Inheritance Tax after the 2nd anniversary of the setting up of the investment.

On the 3rd anniversary of making the investment our client enjoyed 3 options:

• Cashing in the investment free from any potential Capital Gains Tax.

• Retain the investment and continue to enjoy the IHT benefits.

• Re-invest into a new 3 year EIS and enjoy further Income Tax refunds.