Widow - High Net Worth Tax and Financial planning
Initial Situation
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High Net Worth couple
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Wife widowed at age 49 years with a 9 year old son, working part-time
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Husband passed intestate (without a Will)
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Significant Inheritance Tax Liability on second death
Recommendation & Implementation
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All assets passed to surviving wife to utilize the IHT spousal exemption
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Husband's pension fund passed to wife and invested in a pension in her name
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Husband's death in service benefits passed to wife and invested in an Offshore Bond
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Whole of Life policy taken out on wife to protect against the IHT liability on her death
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A Will and Lasting Powers of Attorney set up
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Above average investment returns allowed her to retire early.
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A 5% (tax-free) withdrawal is made from her Offshore Bond annually to supplement her income from other sources
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To date, she has not yet had to draw on her private or final salary pension to maintain her current outgoings and lifestyle
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Cashflow modelling confirms that with even below average returns, she has sufficient income to last until age 99 years. She is currently aged 64.