Fact Finding Questions Flashcards
- Identify the additional information you would need to discuss with Dan and Tara in order to advise on how to meet the following immediate financial objectives:
To draw a tax-efficient and sustainable income from the new business for both Dan and Tara
What will there expenditure be going forward?
How much income do they need?
How much are they prepared to drawdown from the business and in
what form (salary? dividends?)
Certainty in relation to the £80,000 turnover?
How long will it be before they generate a profit?
Of the £80,000, how much would they be able to take from the
business?
Is there a business plan / cash flow forecast?
Are they impacted by IR35 regulations?
For how long are they prepared to use their capital to fund their
income?
Are there alternative sources of income? e.g. take rather than reinvest
dividend income
Will they consider controlling outgoings / making savings if necessary?
Have they considered the tax implications of running a business from
their home full time?
- Identify the additional information you would need to discuss with Dan and Tara in order to advise on how to meet the following immediate financial
objectives:
To provide financial security for the twins and each other in the event of the death or incapacity of either Dan or Tara before retirement (alternatively, to
provide financial security for each other and the twins in the event of death or long-term illness or to protect the business)
Do the couple have any intention of getting married?
Level of income and/or capital required and for how long?
Would expenditure change at all in the event of death/illness?
Confirmation that they have no other life or health insurance?
Entitlement to State benefits (if any as unmarried)?
Claiming child benefit?
Willingness to use other assets, or downsize?
Willingness to use pension funds as death benefits?
ATR and capacity for loss in relation to this objective?
Affordability / budget to be spent in providing solution?
Willingness to make wills ASAP?
Do you couple have employment contracts with their firm?
Would the business provide DIS / income protection benefits/ CIC/
PMI?
Do they consider themselves to be ‘key persons’ in relation to the firm?
Does the firm have any other employees (group cover)?
What happens to the business on death?
What would happen to business if they were unable to work due to
illness?
How much is the business worth?
Willingness to write a shareholder agreement leaving their share of the
business to each other?
- Identify the additional information you would need to discuss with Dan and Tara in order to advise on how to meet the following immediate financial
objectives:
To invest the proceeds of their house sale to provide future financial security
- End purpose of the investment?
Timescale?
Need for access (e.g. for school fees)?
Willingness to use current year’s ISA allowances?
ATR and capacity for loss in relation to this objective?
- Identify the additional information you would need to discuss with Dan and Tara in order to advise on how to meet the following immediate financial
objectives:
To mitigate Dan and Tara’s income tax liabilities
Confirmation that the £10,000 does relate to the balancing payment for
2019/20?
Have the couple earmarked funds for this bill?
Are Dan and/or Tara prepared to take on a risky investment where tax
relief can be claimed to reduce the amount of tax due on January
2021?
- Identify the additional information you would need to discuss with Dan and Tara in order to advise on how to meet the following immediate financial
objectives:
To review the suitability of the couple’s investment portfolio and pension plans
The precise breakdown of asset allocation (cash, fixed interest,
property, equities) for each investment?
The level of diversification / geographical split within the asset
allocation?
Liquidity of the portfolio?
Fund performance where not stated on the fact find?
Whether Dan and Tara’s stated attitudes to risk vary in terms of their
various objectives?
The extent to which the couple’s investments and pensions match their
stated attitudes to risk?
Fund choice (or lack of)?
Options at retirement?
Fund charges/exit penalties?
Held on platform/directly held?
Capacity for loss for Dan and Tara?
Objective/income/growth/timescale?
Use of ISA allowance/CGT annual exemption amount?
Willingness to make changes to portfolio / pension to match stated ATR
/ improve performance / meet objectives?
Willingness to transfer /move assets between them to maximise tax
efficiency, bearing in mind they are not married and so there may be
CGT / IHT implications?
Do the couple have any intention of getting married?
- Identify the additional information you would need to discuss with Dan and Tara in order to advise on how to meet the following immediate financial
objectives:
To review the tax efficiency of the couple’s investment portfolio and pension
plans
- Are the couple willing and able to use their ISA allowances in the
current tax year?
Are the couple willing to transfer ownership of existing assets to each
other to make the most of the personal savings and dividend
allowances (bearing in mind they are not married and so there may be
CGT/IHT implications)?
Does either of the couple have any CGT losses to carry forward?
Has either of them used their CGT annual exempt amount?
The amounts contributed to their pensions in the last 3 tax years?
Willingness to make further pension contributions?
Willingness to use tax-free products?
Willingness for their company to make pension contributions for them
both?
Willingness for their company to offer salary sacrifice if appropriate?
Do the couple have any intention of getting married?
Are they happy to move out of the unit trust to something more tax
efficient?
Are they willing to use riskier investments for tax efficiency?
Confirmation of where the £250 dividend income stated in the income
has come from and whether taxable or not
- Identify the additional information you would need to discuss with Dan and Tara in order to advise on how to meet the following immediate financial
objectives:
To ensure that Dan and Tara have a suitable strategy in place to pay for the
private education of their twins from the age of 11
- Ascertain level of school fees
Views on school fee inflation?
Rate of investment growth required
To what age will school fees be funded? (will this include university?)
Willingness to meet fees from house sale proceeds?
Willingness to save regularly for fees if house sale proceeds
insufficient?
Budget / affordability? (regular savings)
Willingness to protect funds in event of death / illness (regular savings)
ATR / capacity for loss in relation to this objective?
Other sources of funding? (grandparents?)
Local authority / state / charitable assistance?
Are the couple willing and able to use their ISA allowances in the
current tax year?
Do they anticipate further children for whom they would need to
provide?
Protection (income protection, life cover)
Ethical views?
- Identify the additional information you would need to discuss with Dan and
Tara in order to advise on how to meet the following longer-term financial
objectives.
To ensure that Dan and Tara have an adequate income in retirement:
At what age(s) do they wish to retire?
Willingness to defer retirement past this date?
How much income and/or capital will they need in retirement in today’s
terms?
Views on inflation and willingness to take risk in this respect?
Any intention to work on a part time basis in retirement?
Their State Pension forecasts and when it becomes payable?
Contribution history and willingness to meet any gaps?
Willingness to make regular contributions?
Willingness to make lump sum contributions using carry forward if
available?
Do they have contracts of employment (does their company need to
provide a qualifying workplace pension under autoenrollment rules?)
Willingness of their company to provide them with a pension scheme?
Willingness of their company to make salary sacrifice available if
appropriate?
Affordability of contributions based on cash flow analysis
The extent to which they’d be prepared to rely on their other assets?
Asset allocation within each pension fund?
Fund performance to date?
Possibility of switching funds to align with stated ATRs?
Capacity for loss?
Pension fund charges (competitive?)?
Projections of existing funds to retirement age?
Options available at retirement under each scheme and how they
intend to take benefits?
Likely tax position in retirement?
Willingness to downsize?
Will their company continue after their retirement?
If so, will they be able to carry on taking dividends?
- Identify the additional information you would need to discuss with Dan and
Tara in order to advise on how to meet the following longer-term financial
objectives.
To mitigate any potential inheritance tax liability on their individual estates,
whilst maximising their estates for the benefit of the twins
Are they aware that couples who are neither married nor in a civil
partnership do not benefit from spousal exemption?
Do the couple have any intention of getting married?
Why have they not made wills?
Are they prepared to make wills ASAP?
Are they aware of what will happen if they die before a will is made?
What do they want to happen on 1st death?
Are they prepared to change the ownership of their main residence to
tenants in common?
Confirmation that no previous gifts have been made in the last 7 years
and that no previous annual allowances have been used?
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Are the couple willing to make lump sum gifts?
Will nominations be made on any new pension/DIS arrangements?
Are they willing to use trusts?
Are they willing to use disposable income / lump sums now to mitigate
IHT?
Would they consider drawing up an LPA with replacement attorneys?
Would they consider drawing up a health and care decisions LPA as
well as a financial decisions LPA?
Do they want to make provision for their current IHT liabilities?
Are they willing to invest in IHT efficient investment vehicles given their
high ATRs?
Have they considered what they want to happen to the business on
death?
How much is the business worth?
Availability of business relief on death?
