Case Studies
Case Study 1
Mr X had moved to Spain 5 years ago and left his UK SIPP (Self-Invested Pension Plan) frozen in the UK. He was worried that in a couple of years time when he reached 75 (per UK pension rules) he would have to purchase an "annuity" or an "alternatively secured pension".
If he purchased an annuity, he realised that when he died, unless it was a guaranteed annuity, his fund would die with him. Also before he reached 75, if he died his remaining fund would be taxed at a minimum of 35%, leaving a "financial hole" for his wife to sort out.
We were able to transfer his SIPP to a QROPS (Qualified Recognised Overseas Pension Scheme) within 4 weeks which gave him the following benefits and options:
- No need to purchase an annuity at age 75.
- Could choose his own investments within the pension fund.
- On death no tax to be paid by beneficiaries on existing fund.
- Tax free growth on fund whilst in place. QROPS are available to ex-UK residents who have been out of the UK for more than 5 years, or intend to do so. .
Case Study 2
Mr & Mrs J retired to Spain in 2001, Mr J had worked all his life as a structural engineer and over the years they had accumulated a reasonable pension fund and managed to build up a sizeable nest egg.
When they sold their UK property they had enough funds to buy a luxury Villa in South Eastern Spain, and to meet their day to day living expenses. They also would be able to help their 3 children with getting on the property ladder.
The exchange rate in 2001 was £1/1.6 Euro. Everything was going well and Mr & Mrs J loved their new life in the sun, however sadly things changed over the last 8 years. There were 2 significant impacts on Mr & Mrs J's situation. The fall in the exchange rate, which made their income reduce substantial, and the fall in interest they were receiving from their bank savings.
They did not want to risk any of their remaining Capital and fortunately Mr & Mrs J still had some of their nest egg left. After discussions with Blacktower who looked at their overall situation, it was possible to help them create more income from their investments. We managed to do this without exposing them to the risks associated with stock market investments.
Mr & Mrs J are now looking forward to the future, rather than worrying daily as they were previously.
Case Study 3
XYZ a UK based Company came to Blacktower asking for advice on Keyman & Shareholder protection for their newly incorporated Company.
We explained that Keyman Assurance was for any employee who is essential to the success of the business, has special expertise and would be difficult to replace, so that if they died it would cause the company financial loss in either replacing them or loss of profit.
After several meetings, we set up three Keyman Level Term Assurance policies which were owned by the Company with the key employees being the lives assured for a term of 5 years. Weexplained that in the event of a claim the policies would pay the sum assured as a lump sum directly to the Company. The Company were advised to speak to their accountant so they could check the tax position of the policy with their local Inspector of Taxes. Shareholder Protection policies were also arranged and taken out as whole of life assurance policies on the life of another. The three key people took out the life insurance on each other, and were advised that the policies would be classed as a P11D benefit. In the event of a claim, the proceeds would go to the individual who has taken out the policy on the life assured, which will enable them to buy back the deceased’s shares and keep them within the company.
By having a policy either owned by another or in a suitable trust, this removes any chance of the policy proceeds going to the deceased’s estate which could cause potential IHT problems.
XYZ were very happy that Blacktower managed to sort out this cover so they could get on with the day to day running of their business.
Case Study 4
Mr & Mrs W were looking to build an extension to increase the size of their property in the UK, now that there was to be an addition to their family. Their current mortgage was for £200,000 and they required a further £50,000 for the extension. They wanted to make sure that they would be able to arrange for building work to start when planning permission was obtained, so there wouldn’t be a delay, but didn’t want to start paying for the increased mortgage straight away.
Blacktower suggested they arranged a flexible mortgage , whereby Mr & Mrs W borrowed £250,000 which included the extra funds needed for the extension, but were able to pay back £50,000 to the lender straight after the mortgage commenced. They then had the option to drawdown these funds as and when they were needed. They only needed to pay for what they had drawdown. With this type of mortgage they did not need to undergo any further underwriting as long as their financial situation did not change.
Case Study 5
Mr B. is an Operations Manager for a multi national company based in the UK. He is aged 40 and lived and worked in Dubai for a number of years prior to his return to the UK 5 years ago. Blacktower Financial Management was recommended to him 2 years ago by another of our clients and we undertook a full review of his financial needs, including family protection, pensions and investments.
He and his wife already had in place life insurance to cover the amount of their mortgage. We were able to look at the whole of the market for cover at a lower cost than the existing cover.
Similarly, while Mr B. had existing cover to provide an income for himself and his family if he couldn't work because of disability or ill health, we were able to provide better cover more cost effectively. We also identified a gap in Mr B.’s family protection; which was in the event of either he or his wife passing away, they had no provision for a replacement income to be paid until their children became adults. Again we came up with an appropriate cost effective cover which Mr B was very happy to accept.
Mr B. had several investments, including ISAs, which he felt had suffered because a previous adviser hadn't been contacting him regularly. We reviewed his investments and recommended several changes to his portfolio. He now has confidence that his investments will be regularly reviewed to keep up with any personal changes in his and his family's life.
Another area we look at was Mr B's several deferred occupational pension plans in addition to his current company pension. We advised him of his options and provided him with extra advice for when he had additional funds to invest. He told us that he benefits from regular bonuses and we advised him on the best options for him as he also mentioned he wanted to reduce his mortgage by making overpayments.
Mr B is now happy that he has his financial affairs in order and can look to a secure future in the knowledge that Blacktower Financial Management will be there to provide expert advice and guidance whenever needed.
