The Smith Family

Although the following case study relates to an actual example, where we have helped our clients by providing solutions to their financial problems, the names and figures have been changed for confidentiality purposes.

Tony & Hester Smith had large cash balances and a large Inheritance Tax Liability (IHT). They were aware of the problem but not the scale of it and, just felt lost. They had taken some advice in the past but the bank was not able to address the Inheritance Tax Issues. They had outgrown their current advisor. One of their adult children Sally has got long term health issues and they wanted to make some provision for this.

What were the family’s main goals?‍

  • To create perpetual wealth – minimise their tax liability currently and in the future. To make use of all exemptions available to them.
  • Wanted to protect children and grandchildren, to ensure that the wealth that they received from their parents and had built up was not wasted through poor planning.
  • Wanted to build generational wealth within the family and their children were involved in the meetings we held.

How did AMG add value?

  • Collective family meetings to discuss the benefits of intergenerational wealth planning.
  • Explaining the complex into simple and manageable solutions bringing to attention the various options and allowances available to help achieve their goals.
  • Building long term relationships with the family.
  • We also identified that If Tony goes into care, then Hester would not have enough income to live on.
  • The way they had structured their affairs meant that Sally’s inheritance would be at risk.

Outcomes

  • IHT liability reduced by £260,000 net
  • Created a bespoke intergenerational wealth plan that would span generations
  • Engaged with the next generation for their personal planning
  • Protected family assets both now and in the future.
  • Peace of mind for the clients knowing all is in order.

The advice provided to our clients was given after a full evaluation of their specific needs, circumstances and requirements. The solutions provided would not be suitable for most investors and the information provided does not constitute advice.

Through our strategic advice, AMG was able to achieve a net inheritance tax saving of £260,000 by fully utilising both individuals' Nil Rate Band allowances. We guided the family by investing £650,000 (£325,000 each) into a Gift Plan, which not only enabled this tax efficiency but also established a discretionary trust effectively safeguarding the family's assets for future generations.

By structuring the investment to remain outside the estate for seven years, the family successfully mitigated 40% inheritance tax on the £650,000, securing a significant reduction to their taxable estate and preserving wealth across generations.

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise.  You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.

SJP Approved xx/xx/xxxx’