How we work with clients

Successful UK business woman requires help with financial planning

Yvonne, a successful UK resident business woman, held equity stakes worth a combined £10 million in a number of companies she had been involved with during her career. Yvonne and her husband, John, had saved diligently throughout their lives, to the extent that these shares were potentially surplus to their long-term requirements.

Yvonne approached Stonehage Fleming Wealth Planning (SFWP) to work with her solicitor and accountant to formulate a strategy to meet her and John’s objectives.

Yvonne’s Goals

• To gift their three children approximately £3 million each when the children reach the age of 30.
• To ensure the children were not burdened by inheritance taxes, estimated to be £5 million, in the event of Yvonne or John’s premature death.
• To ensure their children develop good financial habits in preparation for the responsibilities and opportunities associated with the family wealth.

Our Recommendations

• We created a lifetime cash flow model to establish that the shares were indeed surplus to their requirements and would not be required to meet expenditure in retirement.
• The shares were gifted to a discretionary trust, drafted by her solicitor. Her accountant established £9,000,000 qualified for business property relief making this element of the gift exempt for inheritance tax.
• We recommended a bespoke life assurance policy to cover the potential inheritance tax liability arising over the next seven years as a result of the excess £1m gift.
• We recommended the appointment of our expert Fiduciary team as a co-trustee, to ensure independent oversight and guidance to Yvonne and John, working with Yvonne’s accountant to restructure and diversify the trust assets in a tax efficient manner.
• To ensure their children have the means to meet any inheritance tax liability, we recommended a whole of life assurance policy to replace the couple’s existing term assurance policy.
• Together with our Family Governance and Succession team we ran a family workshop providing financial education for the children to help them to understand their responsibilities when wealth passes to them.

Outcomes (to date)

• Yvonne and her husband have comfort in the knowledge her three advisers are working together to protect and enhance the family wealth.
• Creating a bespoke life assurance policy saved Yvonne £6,000 in premiums compared to an off the shelf solution that had been proposed by their private bank.
• Independent oversight of the trust helped Yvonne and John to meet their fiduciary responsibilities.
• The term assurance policy, which did not meet their long-term objectives, has been replaced by a more suitable policy which will ultimately provide a lump sum of £5 million for the children to meet the inheritance tax liability.
• The children have a solid understanding of the hard work and sacrifices which helped build the family wealth. In time, through ongoing engagement with Stonehage Fleming, the children will be better prepared to manage the wealth they inherit.

Disclaimer: Please note, all case studies have been carefully anonymised. Although scenarios are based on real life events they have been fictionalised and are an amalgamation of client experiences. All names, locations and occupations have been replaced with pseudonyms.