Widow - High Net Worth Tax and Financial planning

Initial Situation

  • High Net Worth couple

  • Wife widowed at age 49 years with a 9 year old son, working part-time

  • Husband passed intestate (without a Will)

  • Significant Inheritance Tax Liability on second death

Recommendation & Implementation

  • All assets passed to surviving wife to utilize the IHT spousal exemption

  • Husband's pension fund passed to wife and invested in a pension in her name

  • Husband's death in service benefits passed to wife and invested in an Offshore Bond

  • Whole of Life policy taken out on wife to protect against the IHT liability on her death

  • A Will and Lasting Powers of Attorney set up

  • Above average investment returns allowed her to retire early.

  • A 5% (tax-free) withdrawal is made from her Offshore Bond annually to supplement her income from other sources

  • To date, she has not yet had to draw on her private or final salary pension to maintain her current outgoings and lifestyle

  • Cashflow modelling confirms that with even below average returns, she has sufficient income to last until age 99 years.  She is currently aged 64. 

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