Mrs Atkins, an energetic lady in her 70’s was referred to Heron House by an existing client. Mrs Atkins had recently been widowed and had inherited a portfolio of shares from her late husband. He dealt with the family’s finances and as one of his hobbies was buying and selling shares, there were numerous small holdings. Mrs Atkin’s elderly mother had also recently died, leaving her money plus a number of shares.
Mrs Atkins was overwhelmed by the sheer number of investments and daunted by the endless communications from companies. Should she sell the B shares? Should she take up her rights issue? How should she vote on a particular issue? All of this was proving a great worry to her since it was hard to distinguish which communications were important and which were not. In addition, she did not know with any certainty what her income would be, neither did she know the quality of the underlying investments. Also she wanted to make some gifts to her children but was unsure if she could afford to do so.
After a lengthy meeting of discussing her aims and objectives, a strategy was devised to help her. Essentially she wanted to receive a good level of income in order to enjoy a comfortable retirement and also wanted the capital to grow so that she would have money to leave to her children and grandchildren. She also wished to help her children with school fees payments and perhaps most importantly, wanted someone to take away the burden of worry with dealing with a large and complicated investment portfolio. In essence, she wished the portfolio to be dealt with to enable her to enjoy her time with her family and to enjoy her other interests.
The second stage was to obtain a comprehensive picture of her financial situation and a definitive list of all of her holdings. This involved a great deal of work in writing to the various companies, obtaining up-to-date valuations, dealing with all the correspondence and eventually producing a list which gave a clear indication of her net worth.
The third stage was to implement the plan to meet her objectives and to remove the hassle and worry of dealing with the portfolio. Small shareholdings were sold, poor funds were also sold and those of good quality re-registered onto a investment platform. Some of the shares which she had an interest in and wished to keep, such as Marks & Spencers, were re-registered onto the platform.
We are now in the position where she has money on deposit to cover short-term needs and to cover contingencies.The vast majority of her investments are on a platform which provides online access so that she can view all of her holdings at a glance if required. She also receives a good and regular income to complement her pension. We provide detailed written valuations and reviews every six months at our review meetings.
Having made sure that we understood how much of her capital she needed to retain to provide her own financial security we then were able to deal with Inheritance Tax Planning as this was a major concern. We put in place a plan to minimise tax and maximise the amount of family wealth that would pass down the generations. Our IHT plans are tailored to each client’s needs and usually will involve using a whole range of options and ideally will be implemented gradually over a period of years if time allows. In this case we started by making use of the various annual allowances and as she is in good health making gifts to the children which will be free of IHT after survival for seven years.
We also used a range of specialist investment products designed to offer IHT benefits in many cases these will remove some or all of the value of the investment out of her estate for the purpose of IHT calculation after just two years. This is an area where there are a wide range of very useful IHT options ranging from allowing Mrs Atkins full access to capital, providing income, or using trusts to protect and delay making outright gifts for younger family members. In this case we used three different types of product in combination to provide an ideal solution for our client. At fairly low cost we have been able to potentially protect the family wealth from several hundred thousand pounds of IHT that would otherwise become payable on Mrs Atkins death.
All in all, Mrs Atkins is much happier; she has a good and regular income and a portfolio that is very easy to deal with. She is able to enjoy her retirement with her many interest and visits to her family who are spread out throughout the UK. She knows that at our reviews we can deal with any paperwork and she feels much more comfortable knowing clearly her full financial position.
Of all of the above, the removal of the volume and complexity of the paperwork and having a professional adviser on hand to give Mrs Atkins peace of mind was perhaps of even more benefit than the likely IHT saving.
