Case study – exit planning

Our client was in the process of selling her shares in a business that she had helped to build up throughout her working life, and was soon to receive a substantial lump sum.

She required advice on how best to use this sum to help her meet several very specific objectives; to generate an on-going income as tax efficiently as possible, to retain cash sums to help grow an existing holiday let business, to have funds available to meet a significant Capital Gains Tax (CGT) bill and additional funds to meet her on-going financial needs as she transitioned from full employment to partial early retirement. Of highest importance was the need to invest ethically, within very specific parameters.

As she was also losing company benefits in terms of private health insurance and having first hand personal experience of the value of such plans, a review of the policies available was also an important part of the review.

Our Approach
Given the level of funds being invested, and the transitional and life changing nature of her situation, building a relationship of trust and confidence with our client was essential.

Prior to the realisation of her business shares, a number of meetings were held to ensure that we had a clear understanding of our client’s aims and priorities. Very detailed discussions were undertaken around the areas of ethical investing and what this really meant to the client to identify appropriate solutions for both her investment and cash based funds.

We assessed a number of Discretionary Fund Managers (DFMs) to ensure that we found the best fit to meet our client’s needs, looking at both positive and negative screening criteria, and sourced an ethically minded cash management system.

We reviewed the whole of the market to find the most appropriate private health insurance policies available to meet our client’s specific needs, which were to include comprehensive cancer cover and access to London based hospitals.

We worked with the client’s tax accountants to confirm her CGT position and were able to utilise Entrepreneur’s Relief to help reduce the tax payable. The area of Inheritance Tax (IHT) was discussed in some detail, and the impact this would have on our client’s estate, however she was very keen to “pay her way” as she had done all her working life, and so did not view this as a priority at this stage.

Benefits to our client
Our investment strategy ensured that the funds were invested ethically and in a way that our client was totally comfortable with. The investment plans used meant that a flexible level of income could be achieved in a tax efficient manner.

Significant funds were left available in cash to meet the known CGT bill and to ensure that future property purchase could take place in a timely manner. However, the day to day management of the funds would be handled by an ethical cash management system to remove the on-going burden to the client. National Savings and Investments (NS&I) products were part of the overall mix to maximise security, accessibility and tax effectiveness.

Our client’s children were made lives assured on an Offshore Investment Bond so that this part of her investment portfolio could continue without needing to be encashed on death. Investment Accounts and ISAs were utilised to ensure that maximum tax efficiency could be achieved each year through the Bed and ISA process.

Our client now has the reassurance of an on-going income which can be increased in future to account for inflation or changing financial circumstances if necessary. Her investments and cash based funds are all invested and being managed according to her strong ethical beliefs and in a tax efficient manner.

She can easily access funds for future property purchases and to meet her outstanding CGT bill, whilst in the interim the funds will be earning the best possible rates of interest without the need for personal intervention.

Timely and accessible medical care is available in the case of future ill health.

On-going reviews will help to keep these investment strategies on track in future and as our client’s situation evolves.