A young male client suffered from cancer at age 37. His Critical Illness plan paid out over £300,000, which enabled him to leave his stressful job. He took a year off to spend time with his family, before starting a new business. He was anxious to take out new cover, and initially took out Family Income Benefit cover of £25,000 a year if he should die during the next ten years, to help protect his family’s finances. We will try again for new Critical Illness Cover (probably excluding cancer) in a year’s time if all goes well.
A female client was promoted at work, and her employers wanted to start a pension plan for her, contributing 10% of her salary if she contributed 5%. As she was aged 43 and had no other pensions, she was very keen to take up this generous offer. She knows that she will have to save more than this in order to have a comfortable retirement, but sees it as a good start.
My research showed that because a reasonably large amount is being paid in each month, a Personal Pension could provide more at age 65 than a Stakeholder pension.
A man aged 44 was unable to work due to multiple sclerosis, and had to use his savings to pay for full time care in his home. He was too young, and too wealthy, to receive any help from the State or Local Authority.
I discovered that he had been in a company pension scheme for 20 years, but the scheme rules did not allow the pension to be paid before age 63. I was able to transfer the pension fund to another company to get an annuity which took account of his state of health, and he will receive nearly £200 a month for the rest of his life, to help pay for care.
I also helped him to invest some of his savings to have the potential for higher growth than is available in a bank account.
A married couple had recently sold a property, and the amount available for investment was over £350,000.
We fully discussed all the investment options, tax breaks, and features of different methods of investing. The clients decided that they might not need to draw on the investments initially, and maybe only from time to time.
Growth and income potential, tax-efficiency and flexibility were the key requirements. We agreed to invest through a ‘wrap’ platform into collective investments and Individual Savings Accounts. There are thousands of investment funds to choose from, and the clients can go online and value their investments at any time. The charges are very clear, and managing the portfolio is very easy.
A widow and accountant are the trustees for a deceased client. The children and grandchildren, who will eventually inherit the money, live abroad in two different countries, with different currencies. The widow does not need to draw on the trust money, but can do so if need arises in the future.
The money was placed into an offshore investment bond in Jersey. A wide range of funds is available, the charges are clear, income or lump sums can be taken out at any time, and the bond can be cashed in at any time without large penalties. Furthermore, the trustees will not have to pay 50% income tax on the money while it is in the bond, or declare it on a tax return.
Investment-
Power of Attorney
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An English client has power of attorney for an aunt who lives in a care home in Ireland. She didn’t want her money to be invested in the UK, so I arranged an offshore investment bond in the Isle of Man. The money was changed from Euros into Sterling at a time when the exchange rate was very favourable. I also helped to set up an easier way to pay the care fees.
A couple approaching retirement wanted to know if their finances were set up in the best possible way. They had a large spread of investments and good pension plans, but my analysis of the situation showed that three-quarters of the money was in the husband’s name.
This left the wife financially vulnerable if the husband should go into care for a long period. This had never occurred to them before, but they now know how to transfer savings into the wife’s name so she would be able to cope if the worst should happen.
We also discussed options for pension money: income drawdown, fixed annuities, temporary annuities and with profits annuities. In this instance, the favourite is a with profits annuity, as it gives a reasonable level of security, plus the potential for increasing by more than the rate of inflation each year.
A couple wanted to release £220,000 from their house in order to help their son build up his business, and repay the loan in a few years’ time when they down-sized. They had seen another adviser, who recommended a plan with high early repayment penalties. Their solicitor was unhappy about it, and asked me to take a look.
I found them a plan with a lower interest rate on the loan, and early redemption charges linked to the Bank of England base rate. It is unlikely that there will be a charge, as the rate would have to be below 0.5% when the loan was repaid.
Equity
Release-
Remortgage
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A couple from Kent had borrowed £238,000 against the value of their home, mostly at an interest rate of 8.25% p.a. I found them a way to re-mortgage at 7.3% p.a. and got them an extra £11,000 to give to their children.
A single lady from Sussex, frail but otherwise in reasonable health, went into care in Dorchester. The family is very risk-averse, so wanted a care annuity. The total purchase price was £175,000, which was paid from the proceeds of the lady’s house, and the care costs are now covered securely.
Another couple approached me because ‘mother’ had gone into care, and the Local Authority was asking them to pay for it. After analysing the mother’s finances, I wrote my report, stating that according to the published rules, the family should not be paying for the care. This enabled them to refute the Local Authority’s claim, saving the family hundreds of pounds every month.
Disclaimer
- The products referred to in the above examples may no longer be available, or not at the quoted interest rates.
- Changes in laws and regulations may mean that the solutions to the cases may no longer be advisable, or even possible.
- The circumstances and solutions described above are not necessarily right for everyone. Individual advice should be sought first before making any financial decision.
