Things To Remember

Question 1

What should you remember about Nancy and Camaron being 76

Answer 1

Unlikely to go back to work
Might be on basic state pension
Defferal rates are 1% for every 5 weeks
They can take a lump sum defferal

Question 2

What should be remembered for marriage?

Answer 2

Marriage tax allowance - lower tax bands
Tax-free transfers -willingness to transfer assets

Question 3

What should be remembered for good health?

Answer 3

Expected changes?
Life expectancy
Long-term care
Protection (Any currently running)
Funeral costs
PMI

Question 4

What are the limits for long-term care provision?

Answer 4

Upper limit £23,350
Lower £14,250 (£1 for every £250 per week)

Question 5

What should be remembered for diffined benefit pension scheme?

Answer 5

What is solvency
100% protected but rises with CPI

Question 6

What should be remembered for state pension?

Answer 6

What is their entitlement?
Has it been deffered?
For longer than 12 months,
Is there any additional pension?

Question 7

What interest is given on top of deffered lump sums?

Answer 7

2% above base rate

Question 8

What should be remembered when discussing deferal?

Answer 8

Cannot deffer twice
Lump sum avialable after 12 months
Useful for tax efficiency, but age may be a hiderance

Question 9

How much additional pension will a spouse inherit?

Answer 9

50%

Question 10

What is the increase of the pension protection fund?

Answer 10

CPI capped at 2.5% after 6th April 1997
None before hand

Question 11

What is the standard state pension?

Answer 11

£8,814

Question 12

What should be remembered for Nancy’s single life annuity?

Answer 12

Ends on death
Does it have capital protection or nominee annuity?
Is Cameron a nominee?
Level, so no inflation protection

Question 13

What could we do with Camaron and Nancy’s investments to improve tax efficiency?

Answer 13

Lower dividend yield and concentrate on growth
Swap asset allocation to interest
Put into Nancies name

Question 14

What should be remembered for investments

Answer 14

Asset allocation
Performance

Question 15

What should be remembered for dinivesting into ISA?

Answer 15

Willingness to carry on but lower amount to make use of CGT allowance?
Willingness to make up rest from other investments?
Have they used CGT allowance

Question 16

What should be membered for asist grandchildren with property purchase?

Answer 16

How much?
Liquid requirment
How would they like to assist?
What will be the estimated costs?
What is the priority of this goal?
ATR and capacity for loss?
Will this affect their goals?
Loss of growth

Question 17

What things could be considered for helping Nancy and Camaron help their grandchildren?

Answer 17

Gift allowances
Gift history
Would they like to gift?
LISA
Trust

Question 18

If a loan is given to the grandchildren, what should be considered?

Answer 18

Arrangement must be in place and reported to HMRC
Interest is taxable
What happens on the death of a grandchild or inability to pay?
Executors can demand payment or write off the loan.
Wishes should be in Nancy, and Camarons will.

Question 19

What are the advantages of using a trust for helping the grandchildren?

Answer 19

Holdover relief

Question 20

Describe immediate needs long-term care annuity?

Answer 20

Product
Life annuity based on underwriting of long-term care needs and life expectancy. Must be unable to perform at least one or more activities of daily living yo be eligible.

Assured person
Funds the person who requires care but can be paid to a provider
Often set up by LPA

Sum
Paid as income that isn’t taxable if paid to a provider

Term
For life and doesn’t stop even in recovery

Extras

T N/A
W N/A
Indexation
Can be indexed

Guarantees
Can have a guarantee period

Question 21

What is a deffered care plan?

Answer 21

Product
Agreement with local authority that deffers payment of care until death or sale of house.

Assured person
Agreement made for person requiring care.

Sum assured
Can be cheaper than immediate needs. Takes into consideration value of persons home.
Effectively, a loan and can be charged interest.

Term
Can’t be used until their funds under the upper limit for long-term care £23,350. Aim to activate when life expectancy is low.

Question 22

Discribe purchased life annuity

Answer 22

Product

Buy an income using a lump sum for life

Assured person
Can be bought on a joint life basis

Sum
Based on underwriting
Provides income, which is part interest part capital.
Interest is taxed at a marginal rate
(Bad point for Camaron)
Capital is tax-free.
Tax is usually taken at source
Interest can beat savings accounts
Can be level or increasing
Funds outside estate for IHT

Term
Guaranteed for life
Can be set up after death.
Can be set up to stop after another condition.

Index
Can be indexed
It likely requires 20 years to be worth it

Gurantees
Can have a guarantee period
Can have capital guarante
If guranted capital counts in estate

Question 23

What should be in order to maintain Camaron and Nancy’s living throughout retirement?

Answer 23

Changes in personal circumstances
Impact of first death
Monitor performance
Rebalance
Change in cost or cheaper funds
Non-earner threshold
Changes in economy, tax, and legislation

Question 24

Recommend a discounted gift trust

Answer 24

W-discounted gift trust. An investment bond in trust with IHT discount and can provide income

W-to help with buying houses for grandchildren

A- Remain bellow nil rate band in order to not trigger CLT or PLT

T JL2D to provide income after first death.
Payments set from outset upto 5% tax deffered.
Take segments as required for grandchildren

S set up into discretionary trust
Nancy, Camaron, and children act as trustees.
Outside of trust in 7 years

O can set up into bare trust, but discretionary will give better control

N discount will be given for IHT on the underwriting part of the capital
Growth is outside estat