We can rationalise your pensions into a cost effective wrapper, with no provider initial charges. You will then be able to access the portfolio on-line and manage the portfolio more effectively.
Pension information sheet
We can consolidate your PEPs, ISAs and investment funds onto a single platform. The provider charge for consolidation is free and we also do not charge. Within the platform we can switch between funds for free. At any time you can view the portfolio value and global asset allocation.
Investments information sheet
Mitigating Inheritance Tax
There are only a few ways to mitigate IHT but still benefit from the asset. Depending on your age and your state of health the main solutions are as follows:
This trust is useful for clients that are planning to enjoy another 20 years before needing to worry about IHT. The trust can pay a tax free income of 5% per annum, which could be spent or gifted away and all the growth is outside the estate for IHT purposes.
Gift and loan
Gift and loan example
Discounted Gift Trust
This trust can be used by clients who need to remove as much from the estate as quickly as possible. Depending on age and health you could remove up to 75% straight away from the estate, with the residual amount reducing over the following 7 years. This trust can also pay income and again all the growth is outside the estate for IHT purposes.
Discounted gift example
Equity Capital Release
If you have capital tied up in your home, but you do not want to move. Equity release could be used to release some capital from your house. The home is used as collateral and a life time mortgage is purchased. The interest on the loan rolls up over time, again reducing the potential IHT. Coupled together with one of the above trusts, you can obtain an income and reduce potential IHT.
Equity release example
Placing your assets offshore enables the portfolio to grow tax free. This can be very useful for estate planning.
Income in Retirement
The state pension can be supplemented by using a number of solutions:
PEPs and ISAs
Both investment income and capital grow tax efficiently within the ISA wrapper. But when you need income, the investments can be switched into income funds which can provide a tax free income of up to 7%.
ISA income information sheet
Flexible Income Drawdown
There is now more flexibility when you come to make the decision to 'take' your pension. You are able to receive a tax free lump sum, but you do not have to take out an annuity. The pension could then carry on growing and if you wish, pass it onto your beneficiaries on death. Examples of your options are:
Income drawdown information sheet
Equity Income Release
Income can be generated by borrowing cash using your home as collateral. The interest rolls up and is paid back when the house is sold.
Your pension can be converted into an annuity which will provide a guaranteed income for the rest of your life. There are a number of variables to consider when taking out an annuity.
A corporate typically has cash sitting in an account receiving a return less than inflation. If this cash is not needed to support cash flow, it could be invested.
Depending on your company's method of accounting, historic or fair value, there are different options available to you.
If corporation tax has already been paid then it could be invested with the goal of growing it until the company is sold or wound up. By using an offshore bond, administration could be minimised and corporation tax deferred.
Cash which might be needed to cover tight cash flow periods could be invested in a range of funds with low volatility.
If you need to fund the cost of care, but do not have the money available, you would normally need to sell your home to free up the cash. However, if you wish to keep the home it may be possible to use equity release to borrow against the house, and pay the loan back when the house is sold.
By keeping hold of the home you save any tax and the loan also reduces any potential IHT.
Unbiased Financial Planning are authorised to provide independent mortgage advice, whether you need a residential or a buy-to-let mortgage.
Unbiased Financial Planning are authorised to provide a wide range of insurance products.
General information sheet
+44 (0)20 8715 4004
email@example.com 37 Dorset Road, Merton Park, SW19 3EZ