Family Protection
Looking after your family and ensuring that there are adequate funds to cope with the unexpected should form the cornerstone of your financial planning.
The impact of illness, injury, job loss or death happening to you, or those that are closest to you, could plunge your family into real financial hardship. Sense can help you to assess your risks and work out how much money you would need to cover debts and provide your family with an income for the future. We can then devise cost effective ways to help cushion the blow.
- top -
Savings and Investments
We all have goals, whether they involve buying a house, saving for a child’s education or planning for retirement. Formulating a financial plan will help you achieve those goals.
Saving, whether for a rainy day or big life changes, is becoming increasingly important in today’s society. A reduction in state support for retirement, an increase in the cost of raising children, a sharp rise in university fees and an increase in consumer borrowing, means the need to invest for the future is essential.
The rise in property prices over the last decade, longer life expectancy, uncertainty in employment, and many employers cutting back on pension provision for staff are all factors that have taken many by surprise and call for an increase in the amount that we save.
Whether you save on a regular basis or it’s because you’ve inherited money, sold your business or won the lottery, it’s important that your money should be wisely invested so that its spending power is protected for the future. Leaving large amounts of money on deposit in banks or building societies may not be the best long-term answer. Although traditionally these accounts have been viewed as safe, interest rates have reduced sharply over the last ten years or so and deposit accounts may not now be keeping the value of your money in line with retail price inflation, especially after taking account tax deducted at source.
Many people recognise that to achieve better long-term protection for their money against the effects of inflation, it is often worth considering equity related investments. These are ones that are linked to changes in the value of company shares and the stock markets, both in the United Kingdom and abroad. Because of this the value of equity investments can go down as well as up and should you encash them you may not get back the money you initially invested. You can gain access to equity markets either directly through buying shares or indirectly by investing in products such as unit trusts, investment trusts, insurance bonds or perhaps even a life assurance policy. Shares, unit trusts and investment trusts can be held in tax effective individual savings accounts.
Sometimes our clients ask us to take over the management of their share portfolio or ask us to sell it on their behalf to release funds for other purposes. We are not regulated for share dealing, whether this is on an execution only or advice basis, but we can introduce clients to separately regulated companies who specialise in discretionary portfolio management.
Many clients wish to remain involved to some degree in the management of their investments. Sense can help you develop an investment strategy which is built around your own timeframes and objectives and which uses the products best suited to your individual attitude to investment risk and tax position.
- top -
Pension Planning
We all know that the United Kingdom is suffering from an ageing population and more and more pensioners are relying on a smaller workforce to fund state pensions. Successive governments have recognised the need for individuals to make extra provision for retirement by offering tax concessions to personal pension savers and company pension schemes. However, it is recognised that many people will not enjoy financially secure retirements without being encouraged to take more action on an individual basis.
The pensions market is vast and there are numerous products to choose from, each with different charges, fund performance and legislation. It is important to ensure that your contributions are adequate to provide you with the income that you would like to receive in retirement.
Currently the pension tax breaks offered by the government are 20% for basic tax rate payers and 40% for those paying higher rate tax. It is not often that HMRC actually give us money, so it makes sense to take advantage by ensuring that you have affordable tax efficient pension arrangements in place.
Many employers are obliged by law to offer a pension scheme to employees. If you are lucky and your company contributes, it is usually sensible to take advantage of such a scheme. If you are self-employed, a stakeholder pension could be the way forward. Stakeholder pensions were introduced in April 2001 with the intention of encouraging those with lower incomes to plan for retirement. These pensions aim to be straightforward, low cost and flexible. For the more adventurous, a self invested personal pension (SIPP) allows you to manage your own investments.
You can contribute to as many pensions as you like, as long as you don’t exceed the maximum levels for contributions set by HMRC. In theory, the more you contribute the greater your retirement income.
Sense can advise you on the use of pensions to provide a tax efficient way to save towards retirement whilst at the same time maintaining your individual investment strategy along the way. Using our
Pension Audit Service we can also review your existing pension arrangements and take these into account in developing your overall pension strategy.
- top -
Options at Retirement
Having successfully built up a pension fund during your working life, there will come a time when you will need to make some important decisions about how to use this fund. These decisions involve how you intend to draw your pension income to ensure the benefits best suit your needs in retirement. It is normal for people who are retiring to convert a portion of their pension fund into a tax-free lump sum with the balance used to purchase an annuity which will be paid for the rest of their life. If you purchase a joint life annuity with your spouse or partner then this will be paid until the second one of you dies. Annuity rates can vary and you don't have to buy your annuity from the company that's been managing your pension fund.
An alternative to purchasing an annuity is to convert the retirement funds into an income drawdown arrangement or a self invested pension plan. Whichever you choose you can still take a tax free lump sum but the level of income that you choose to receive will be taken from your invested funds. At age 75 you must then purchase an annuity or an alternatively secured pension.
This is obviously an important and complex area. Sense can help you to look at the capital that you have built up in pension arrangements and other forms of investments and advise you on how to draw your retirement income from these in a way that matches your ongoing objectives and family circumstances.
- top -
Estate Planning
Unfortunately even after we die we are not free of the clutches of the taxman. During the 2008/2009 tax year, everything that you leave in your estate over £312,000, the nil rate band, is subject to inheritance tax (IHT) at 40%.
Before November 2007, when one party to a marriage or civil partnerships died, any nil rate band left unused was lost. Recent changes in inheritance tax legislation allow you to transfer any unused part of your nil rate band of chargeable estate to your spouse or registered civil partner (assuming no chargeable transfers are made at the time of death or during the previous seven years) meaning, on current thresholds, a total of up to £624,000 can be distributed tax free when the second person dies. However, for many this is ‘the tax cut that never was’ as married couples and registered civil partners could have previously gained this advantage by being well advised and planning in advance.
Nobody wants their beneficiaries to receive a hefty tax bill, particularly when there are measures that can be taken to reduce or even eradicate it. With the rise in house prices over the last few years it is not just the wealthy whose assets are worth more than the available nil rate bands. Sense can help you to avoid paying too much tax by combining the use of wills, trusts and other tax mitigation techniques, and also advise on ways of funding for future inheritance tax liabilities. This service is not regulated by the FSA.
There are many other potential threats to your children’s inheritance. Re-marriage of a spouse, divorce of a child and long term care are just three reasons your estate may not pass to your loved ones. Your assets could end up in the hands of your local authority, HMRC, or could even end up passing outside your family. We work closely with our colleagues in Sense Legal Solutions to ensure that, with prudent planning, your hard earned assets pass to those you love
- top -
Long Term Care
Very few of us will have given any consideration to what would happen should we be unable to look after ourselves in later life. Nursing homes and round-the-clock care can be very expensive and, with the current pressure on local authority spending, it is no longer sensible to rely on social service provision to cover the cost.
With people living longer the issue of funding long term care is only going to get worse. If your assets are over £22,250 you will be assessed as being able to pay for, or make a contribution to, the cost of your own care. If you are deemed able to afford care, you may have to sell your home, and plans to leave an inheritance for your loved ones may have to be abandoned. Believe it or not, it is illegal to deliberately deprive yourself of an asset to avoid paying care fees and so a simple transfer of ownership to a son or daughter will not suffice.
If you or a relative is concerned about meeting the costs of long term care then Sense can offer advice from a specially qualified adviser who can discuss with you the options available. These may include the generation of additional income from capital, equity release schemes, re-writing your will to protect your assets and property, and buying a form of insurance policy.
- top -
Trustee Investment Planning
The needs and requirements of trustees can differ significantly from those of individuals. Whether you are a professional trustee or a lay trustee acting on behalf of a friend or family member getting the right type of investment advice is important although trustee investment advice is not regulated by the FSA.
The Trustee Act 2000 imposes a statutory duty of care on trustees who now have the responsibility to take “appropriate advice” on investment matters. Trustees have had to become more proactive and regularly review the investment of trust assets.
Sense can help trustees to comply with their responsibilities by assisting in the process of formulating investment policy and objectives, managing the investment arrangements and regularly reviewing these at trustee meetings.
- top -
Sense Legal Solutions
Our colleagues in Sense Legal Solutions specialise in protecting your assets and your family, particularly children, disabled relatives and the elderly. These services are not regulated by the FSA.
Without a valid will your assets will be distributed according to the rules of intestacy which lay down a rigid method of estate distribution and take no account of your wishes. Taking the time to ensure that you have a properly constructed will in place can ensure that your estate is handed on as you wish and, also, that proper provision is made for dependant or disabled relatives and children who may be minors, or still studying at university.
Many of our clients have joint estates in excess of £624,000 (when taking into account property values, death in service benefits, life insurance proceeds, savings, investments and interests in trusts) and there is a number of advanced inheritance tax planning techniques which can be implemented by way of wills and trusts and which can be tailored to individual needs.
Where joint estates are less than £624,000 in value, then you should give consideration to protecting your assets any way. The number of properties sold each year to fund long term care and the number of properties and other assets not inherited by children due to re-marriage and divorce doesn’t bear thinking about.
Furthermore, you should give consideration to who will manage your affairs and make important decisions on your behalf about your property, affairs, personal welfare, care and medical treatment if you were no longer able to do so. There is a variety of circumstances when this might be necessary including mental incapacity, physical incapacity or absence from the country. Or, simply, you might just prefer to leave the handling of your assets to a trusted family member or friend. You can choose who to appoint in any of these circumstances using lasting powers of attorney. If you are no longer able to make decisions on your own behalf, and there is no lasting power of attorney in place, then there is a need for the Office of the Public Guardian to get involved in appointing someone to manage your affairs. This can be a costly and intrusive process.
Sense Legal Solutions can help you to plan for the future and ensure the protection of your family wealth and personal welfare. An initial consultation with a specially trained colleague will cost you nothing.
- top -
Sense Mortgage Solutions
Whether you are a first time buyer starting out on the property ladder, looking to move to a larger property to provide more space for the family or are looking for an investment property to rent, it is likely you will need a mortgage* to help you make your move. You may even be considering re-mortgaging to get a better deal or to release capital growth in the value of your property to help with home improvements or to provide money for a business venture.
Gone are the days when a borrower was grateful to the lender for providing them with a mortgage facility. In today's marketplace, lenders are in competition with each other for your valuable business. The mortgage market is a complex area. There are so many types of mortgage available that it is easy to become confused and it’s possible that the products offering the lowest headline rate of interest look attractive. Taking booking and arrangement fees, conditional insurances, higher lending charges, lock-ins and early repayment charges into account, may make these products less appealing that you first thought.
Deals are constantly changing and trying to keep abreast of what is on offer is not easy. We have access to all available deals and our mortgage advisers can research the market to find the product that best meets your needs. We will also oversee the process of completing on the mortgage and ensure that all the parties have all the right documentation at the right time. This is an essential part of the service as communication breakdown can lead to unnecessary delays and complications. The role of Sense Mortgage Solutions is to ensure that not only do you have an affordable mortgage which is right for you but that everything progresses as smoothly as possible from application to completion.
*
Your home may be repossessed if you do not keep up repayments on your mortgage.
If you would rather pay for mortgage advice via a fee as opposed to Sense Mortgage Solutions receiving a commission, our charges would typically be 0.5% of the loan, therefore, for a £100,000 mortgage the fee would be £500.
- top -
