Via Power of Attorney (POA)
Mrs East has completed a power of attorney which is now held by her son and Solicitor. She had recently sold a property and wanted to try to mitigate Inheritance Tax (IHT) without compromising her own financial security.
- Has cash balance of £500,000 from house sale
- Wishes to reduce IHT exposure
- Has high pension income
- Significant investment portfolio of £550,000
- Now in care home
- Aged 95 but in good health relative to age
- Attorneys to invest £400,000 into a suitable Business Property Relief (BPR) qualifying investment
- £20,000 to be placed in a current account for emergency access
- £80,000 invested into savings account to meet additional care home costs for the next three years.
- Retain existing investment portfolio
Benefits from advice given
- After holding the investment for 2 years, the £400,000 is removed from her estate.
- Tax saving of £160,000 increasing the value of the estate passed on to beneficiaries
- Access to capital if required
- Income can be generated in the future if required to assist with care costs
- Children benefit from any capital growth on the investment
- Existing investment portfolio continues to provide income and capital growth
- Pensions and investment income cover care home fees
- Avoids need to gift significant capital which is difficult under PoA
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We will look to carry out a regular review of your circumstances, objectives, needs and portfolio performance to ensure all arrangements continue to be suitable and advise of any changes that may be appropriate.
This example is for illustrative purposes only, based on current legislation and tax allowances. Tax rules and regulations are subject to change.