John & Mary were in their late 60’s and happily enjoying their retirement. And so they should! John had worked long and hard in a Company that he had helped to grow over many years. He had benefited from his share options. He had accumulated some real wealth. They had plenty of income in retirement; from his Defined Benefit pension, from some private pensions, interest off their savings and dividends off their shares. They had accumulated a big Number. And they were enjoying it! House wise John & Mary were ‘empty nesters’ and where about to downscale to a smaller, more manageable property. Their three children had all moved out and their five bedroom house was now too big for them. They had found an apartment overlooking John’s Golf Club. Perfect. Their downscale in house value would soon see €400,000 going from bricks and mortar into savings.
But what did all this mean? And what about Inheritance Tax? John was encouraged to meet with Premier Financial by a golfing pal. First Premier Financial spent some time really getting to know John & Mary, about the life they’ve had, and the life they’ve got. Premier Financial wanted to understand what John and Mary had planned for their own future, and possibly for their children and grandchildren. Then Premier Financial helped them to identify the cost of the lifestyle they wanted to continue to enjoy – this gave an indication of their ‘expenditure’ requirements throughout life. Premier Financial also got them to think about what else they might like to do in their lifetime in order to really enjoy their remaining years. Premier Financial gathered the facts about what they had accumulated; their capital position, their assets, their liabilities and their many sources of income. And then Premier Financial used a leading financial planning software, together with a thorough understanding of his clients circumstances, Premier Financial‘crunched their Number’.
This is what Premier Financial found… Based on the conservative assumptions they had made, after allowing for inflation, and after allowing for the potential costs of long term nursing care, John & Mary would NEVER run out of money. In fact, John & Mary’s wealth would continue to increase, even after allowing for extra expenditure. But John & Mary had a big problem. A different kind of problem to most. Instead of John & Mary running out of money, John and Mary were well on course to die, with TOO MUCH!
Why’s that a problem? Here’s why… After having paid tax throughout their whole life, on everything they’d ever earned (income tax, PRSI & USC), on pretty well everything they’d ever spent (VAT), more tax when John sold his shares (CGT), tax when they refuel their Mercedes (fuel tax), tax on their wine (alcohol duty) and tax every time they had moved house (Stamp Duty). In fact John & Mary were about to pay another slug of tax (€24,000 Stamp Duty) when they soon downscaled their house. Tax, tax, tax.
But their biggest tax bill was lurking… Premier Financial helped John & Mary realise the size of their problem, and just who was going to be the single, largest beneficiary of John & Mary’s hard earned estate. The Department of Finance! If both John & Mary died now the Inheritance Tax bill was well over €1.4 million. And it was going to get far worse.
But it didn’t have to be that way. So Premier Financial, using leading financial planning software helped John & Mary work out just how much more they could afford to spend, and how much they could confidently afford to pass on to their children NOW and over the next ten years without fear of them ever running out of money. Effectively, with the help of the financial planning software, our inspiring adviser helped John & Mary create a ‘spending & gifting programme’. John & Mary are now on course to eliminate their Inheritance Tax liability. They are on course to manage their wealth to give them the life they want whilst gradually passing on wealth down to their children and grandchildren. They’ve also booked a ‘First Class’ Round the World cruise, and why not. They can do this, because John & Mary now know – and more importantly understand – their Number.Back to Case Studies