Case study – exit planning for directors

Our client was the MD and equal shareholder of a Midlands based manufacturing company.

We took on the role of advising the client in conjunction with his Accountant with a view to realising benefits from the sale of the business as tax efficiently as possible, and organising his personal financial planning affairs to meet his needs in retirement.

The net proceeds of the sale were over £10 million and the client also had significant existing pension and investment assets.

Our Approach and Findings
In reviewing the client’s financial planning affairs, it was clear that the risk profile attaching to their existing assets was far more speculative than the client was comfortable with.

The impact of the pension Lifetime Allowance (LTA) had been taken into account in relation to his pension affairs but not his Death in Service benefits, which could have jeopardised his pension protection.

In terms of estate planning the sale of private company shares would result in the transfer of a significant proportion of assets from Inheritance Tax (IHT) free funds into assets which would be subject to IHT, creating a seven figure liability.

The client’s pension and investment affairs were reorganised into a co-ordinated strategy that was in line with their attitude to risk, capacity for loss and requirement for growth.

This strategy protected the client from the unexpected downturn in markets that subsequently occurred, and enabled him to benefit from the following upturn.

The client’s death in service benefits were reorganised into cover which did not jeopardise their Lifetime Allowance, and which provided tax free benefits.

The proceeds of the business sale were coordinated into the client’s existing benefits to provide tax efficient income and growth together with the ability to mitigate future IHT.