Case Studies

 

These are just a few examples of the way Arkenstone Wealth Management has helped real-life clients to plan, grow and protect their wealth:

Planning for Retirement

Aims

Having run a successful interior design business for many years, Mr and Mrs L had reached their early 50’s and felt it time to begin practical planning for retirement. Their aims were to be more available to their family – particularly their grandchildren – do more charity work and generally live life at a more relaxed pace.

They’d prudently saved into numerous pensions, investment and ISA plans with a combined value of £700,000. Their main questions were:

  • Could they afford to retire?
  • Did they have enough to live their ideal retirement?
  • What level of investment risk was right for them?

Recommendations

Having taken time to understand more about their ideal lifestyle and consider the impact of various changes in circumstances (e.g. moving house, stock market fluctuations), I recommended:

  • they make additional pension contributions using idle savings sat in their limited company account.
  • a moderate risk investment strategy to match their risk profile and long-term income and growth targets.
  • they consolidate their many investments and pensions under one roof.

Outcomes

  • The planning process gave them absolute clarity about their financial position, so much so they felt confident enough to retire at 55 – much earlier than they’d ever anticipated.
  • Making company pension contributions provided a very tax efficient method of moving company money into their personal names.
  • They now enjoy a more disciplined and robust investment strategy, lower management charges and are able to monitor the performance of their money far more easily.

Stress-free Retirement

Aims

Mrs E, a widow, was three years into her retirement and the travel bug had well and truly hit! She was enjoying seeing more of the world than ever before, but the cost of this lifestyle was outstripping her income meaning her capital was being depleted.

She and her late husband had worked hard to build a sizeable estate, which included property and savings. Mrs E wanted to know how to:

  • invest conservatively to generate more income to meet her living costs and sustain her in later life.
  • reduce the Inheritance Tax liability on the estate without compromising her lifestyle.
  • achieve her aims whilst keeping her financial affairs as simple as possible.

Recommendations

Based on expectations of her short and long-term spending plans, I recommended:

  • a series of suitable low risk investments totalling £400,000.
  • one of these investments be placed into trust with her children and grandchildren as beneficiaries.

Outcomes

  • Mrs E receives the additional income needed to fund her lifestyle and is no longer depleting her capital.
  • The long-term growth potential of these investments should also help towards the cost of care in later life.
  • The money held in trust will be outside of her estate for Inheritance Tax purposes provided she survives seven years (saving £120,000 in tax). Mrs E is also able to receive income from the trust during her lifetime.
  • The trust is easy to administer and she retains control over how the trust money is invested and when distributions are made to her beneficiaries.

Investment Management… and more

Not everyone has clear-cut life or financial goals at the outset but circumstances mean they find themselves with investment decisions to make. This situation can typically arise due to an inheritance, divorce or the sale of a property or business.

Situation

Mr M was 45 when he found himself in such a position in 2011 when his father generously gifted him £250,000. Mr M was married with two young children. He owned his home (with a small mortgage) and was a well paid – but very busy – finance director.

He had no particular plans for this money but wanted it to:

  • generate higher returns than inflation over the long-term.
  • remain reasonably accessible in case he needs some of it.
  • be invested tax efficiently.

Mr M had considered investing in property, but felt it was inflexible, tax inefficient and that he lacked the time to manage such an investment.

Recommendation

My initial and very straight-forward advice was to:

  • invest in a diverse, professionally constructed investment portfolio that met Mr and Mrs M’s balanced attitude to risk and growth expectations.
  • use financial products containing no restrictions or penalties when accessing the capital.
  • arrange for the portfolio to use their valuable ISA and capital gains tax allowances every tax year.

Outcomes

  • Their investment returns helped to protect the capital against the erosive impact of inflation.
  • The regular use of their tax allowances helped enhance their investment returns and reduce income and capital gains tax liabilities.
  • They enjoyed peace of mind knowing they could access the money at any time.

But the advice didn’t stop there…

In 2014, Mr M decided to follow his entrepreneurial instincts and leave his stable job to start his own business with Mrs M. At the same time, they also decided to send their eldest son to private school!

  • The capital needed from the portfolio to kick-start the business and pay school fees reached their bank account within one week of them requesting it –  with no tax or investment charges incurred.
  • At their 2015 annual review, we moved part of the portfolio into pension plans for them. The pension contributions attracted tax relief from the government, which helped to further boost their retirement pots.

Life has since been pretty settled for Mr and Mrs M but their financial plan is such that it can be easily restructured if their circumstances and needs change.

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