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  • Client case study: Financial advice at a crucial turning point

    Financial advice can benefit a wide range of people at different points in their life. Whether that’s younger clients accumulating wealth or those in later life planning for things like long-term care or passing on their wealth tax efficiently.

    Last Updated: 21 June 2023

    Financial advice can benefit a wide range of people at different points in their life. Whether that’s younger clients accumulating wealth or those in later life planning for things like long-term care or passing on their wealth tax efficiently.

    Sometimes the trigger for clients to get professional advice is simply to check in and stay on track to meet their financial goals. But for some clients, advice is needed at a time of change.

    Mrs Vallis came to me following the death of her partner. It’s fair to say that most couples pool their resources one way or another and plan their finances together. And this is something we as advisers encourage.

    But it also means that if a partner passes away, it can feel like the survivor is left with a heavy burden and often a degree of uncertainty.

    Here’s how I helped Mrs Vallis make some important decisions and sure up her financial position for the future.

    Is financial advice for you?

    If you find similarities to your own situation in this case study, there are still likely to be some differences. These differences, however small they may seem, could mean you’d need to make different decisions. Please don’t use this case study alone to make personal decisions. Always seek financial advice if you’re unsure.

    Find out more

    Property

    Mrs Vallis co-owned her house with her late partner. But he left his share of the house to his sons. In order to buy out that share, Mrs Vallis needed to release over £200,000 from her assets.

    As an experienced client with HL and having taken advice before, Mrs Vallis knew it wasn’t a simple case of selling up and cashing in. There were some tax implications of withdrawing such a large sum. Not to mention the knock-on effect that could have had on the rest of her retirement plans.

    There were a number of sources to raise the funds from including ISAs, pensions and a Fund and Share Account.

    I explained that it’s best for her to leave her ISAs alone as these will allow her to draw an income tax efficiently.

    Instead, we looked to her Fund and Share Account and her pension to raise the funds needed. We had to be tactical about withdrawing funds from the Fund and Share Account due to the capital gains tax (CGT) implications. With tax year end fast approaching, timing was everything. Mrs Vallis had depleted her CGT allowances for the 22/23 tax year so we waited to release some of the capital when the 23/24 allowances came into effect despite the new allowances being lower.

    For the remainder of the funds needed, we turned to the tax free cash available to withdraw from her pension. The main consideration here was whether this would have a knock-on effect on the long-term income needed from that pension.

    You can usually take up to 25% of your pension tax free. You can do this in one big chunk or in several smaller ones. But either way, you should always consider the fact that money is no longer invested and therefore not growing or generating dividends for income. In Mrs Vallis’ case, we looked at her retirement income requirements, did the sums and established she could release some cash and still live comfortably on the remaining pension.

    You can usually take up to 25% of your pension tax free. You can do this in one big chunk or in several smaller ones.

    Other pension considerations

    When I first spoke to Mrs Vallis, she was unsure whether she would be able to take on her late partner’s defined benefit income. When a couple aren’t married, getting access to this can be difficult.

    This caused some uncertainty for Mrs Vallis and she wanted some reassurance that she could live comfortably for the rest of her retirement with or without the defined benefit pension income.

    As I had already looked at her portfolio including her pension, I was able to confirm that she could still live the retirement she wanted. We needed to do some consolidation, some transfers and other tweaks, to make this happen.

    She also had a teachers pension and the state pension to prop up her position.

    I’m happy to say that since we first met, Mrs Vallis has been granted her dependents pension and is now in an even stronger financial position.

    Beyond the pounds and pence

    After taking advice, Mrs Vallis came away with added confidence that she had made sound decisions and that her financial plans were strong.

    Knowing she has financial resilience has also given her options. Crucially, as an active member of her community, she’s able to stay in the house and area she loves. She’s also able to continue her work as an exam invigilator and looks forward to doing some travelling.

    As an adviser, it’s nice to know that by working with Mrs Vallis, we’ve managed to take the weight off her shoulders. That is and always will be the most important outcome of the work I do with my clients.

    Could our advisers help you?

    If you’re unsure about your financial future or whether you’ve got the right financial strategy in place, our advisers can help. Like Clive helped Mrs Vallis, any of our advisers can assist you in making complicated decisions and give you confidence you’re on the right path.

    View our full range of advice services

    Book a call with our advisory helpdesk to find out more about how advice could help. They don’t provide personalised advice but they’ll help you decide if advice is right for you and explain the charges involved.

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