Case study: Wealth Planning ahead of retirement

Cash management, retirement planning and investment structuring

A married couple approached Brown Shipley for help with their wealth management after the wife received a significant payout following the sale of her minority shareholding in a business. This case study explores how we approached the financial planning process.

Background

Married couple with the husband retired and wife intending to finish work in two years’ time.

Shareholding

The wife was about to receive a significant payout following the sale of her minority shareholding in a business.

Additional Payments

As part of the exit deal, she is likely to receive further earn-out payments.

Considerations and challenges — multiple pensions, investments and tax liabilities

Over the years, they had also accumulated various pension and investment products, which had become difficult to administer. The couple were also seeking a better understanding of where these assets fit into their overall financial position. With the payout in mind, they requested advice on how to meet their upcoming tax liabilities.

Alongside this, they sought advice on retirement planning as the wife was due to retire in the near future. They wanted guidance on how to structure their assets to provide the required level of income once she stops working. They are keen travellers and intend to spend more time doing this in the early years of retirement.

How we helped

Working closely with the couple, we agreed their priorities as follows:

Cash management

Preparing for retirement

Maintaining their lifestyle

We staged the financial planning process in four phases, which allowed them to focus on one matter without becoming overwhelmed:

Stage 1 – Open individual banking accounts.

We took advantage of the husband’s nil rate tax band and placed a fixed-term deposit in his name to meet the upcoming Capital Gains Tax (CGT) liability.

Stage 2 – Invest and structure the cash following the sale of shares.

We agreed the investment strategy for the immediate proceeds. For example, one element of  the structure was to invest in UK Gilts directly and take advantage of very competitive prices. Also, considering she is a higher rate tax payer, gilts were an attractive investment as any capital gain is  free of CGT.

Stage 3 – Review and consolidate their existing pensions.

We reviewed 11 legacy plans and provided advice on each plan individually.

Stage 4 – Cash flow modelling.

We prepared a lifetime cash flow model to outline how their needs could be met throughout their lifetimes. This model will be revisited to aid conversations around estate planning.

The couple now have a clear understanding of their financial position and reassurance that their assets and pensions are aligned to their future plans.

Do you need help with wealth or retirement planning?

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Our Wealth Planning Service can involve investing your capital, which places it at risk. Investment risk means that the value of your investments or any income can fluctuate and you may not get back some, or the entire amount invested. We recommend that you seek professional tax advice to understand your personal tax liabilities. This will depend on personal circumstances and the prevailing tax rules, which are subject to change. Tax planning is not regulated by the Financial Conduct Authority or the Prudential Regulation Authority.
Tax planning is not regulated by the Financial Conduct Authority or the Prudential Regulation Authority.