Blankstone Sington’s Inheritance Tax Portfolio provides an award winning approach to sheltering part of your client’s estate from IHT, with the potential for capital growth. The following case study illustrates one way in which it can be used to support the needs of an individual client.
With so many different ways in which advisers can help clients to minimise the IHT liability on their estate after their death, Liverpool- based stockbroker and investment manager Blankstone Sington’s Inheritance Tax Portfolio has the advantage that investors have the opportunity to obtain full IHT relief after only two years.
How does it work?
The IHT portfolio comprises companies traded on the Alternative Investment Market (AIM), with the objective of securing Business Property Relief (BPR) against IHT by investing in a range of qualifying companies, yet still enables your clients to maintain control of their assets.
As a business, they have been successfully investing in smaller companies for over 40 years. Their Inheritance Tax Portfolio has been available to investors since 2010, and operates through our specialist in-house research department.
An IHT Case Study
The following case study shows how the IHT portfolio can be used to help a client meet their IHT planning needs.
The client scenario
Mr Cunningham is 90 years’ old, is in good health, of sound mind and has investments valued at £600,000. The value of his assets is such that, notwithstanding existing tax reliefs and exemptions, and without acting soon, his estate is likely to incur an inheritance tax charge upon his death.
His financial plan has shown that with a net disposable income of over £65,000 per annum, Mr Cunningham can afford to tolerate risk and some financial loss from his investment portfolio without negatively impacting his future standard of living.
Critical for this client is his objective to mitigate his potential inheritance tax liability to the best of his ability whilst retaining control of his assets.
The advantages of business relief
He understands that taking advantage of the tax benefits of Business Relief, by investing into a portfolio of qualifying investments for a minimum of two years, gives him that option.
He further understands that the funds must remain invested until his death if a claim for inheritance tax relief is ultimately to be successful. An investment in selected AIM stocks via Blankstone Sington’s Inheritance Tax Portfolio is therefore an appropriate option to meet his needs.
Mr Cunningham’s application is assessed to ensure that the service meets his needs, objectives and risk profile.
Assessment of needs
As he is over 90 years’ old, an assessment of Mr Cunningham’s vulnerability takes place and additional care is taken with regards to investment advice. Studies suggest he will become increasingly more likely with each passing year to suffer from physical ailments which may impact his ability to look after himself, potentially requiring costly additional care, or mental ailments which may impact his ability to assess and understand his investments and make financial decisions.
We determine that he is a confident investor with experience using a range of financial products and services, frequently reviewing the value of his pensions and investments. His income exceeds his expenditure and his capital reserves are such that he will not require access to the portfolio to fund his current standard of living or to meet any future expenses including potential care costs, in future.
Mr Cunningham’s tolerance for risk is high. Indeed, he understands that the Inheritance Tax Portfolio follows a high-risk investment strategy and that its value may fluctuate sharply. Despite his age presenting potential susceptibility for harm, Mr Cunningham displays no signs of vulnerability.
Mr Cunningham decides to invest £65,000 in the IHT portfolio, which represents a relatively modest proportion of his overall capital.
- Net worth and income
- Current IHT liabilities
- Confident investor whose attitude towards risk is high
- Investment timescale – no requirement or intention to access funds
Summary of benefits:
- 65,000 invested in IHT portfolio
- 100% IHT exemption after two years
- Reduction in IHT tax bill of £26,000, assuming 40% tax (based on current legislation)
- Continued control over the assets and ability to access at any time
- Recommend retaining income produced for re-investment
- Anticipated portfolio yield of 2-3% £1,300 – £1,950 additional income per annum
About Blankstone Sington
Since 1976 Blankstone Sington has been one of Liverpool’s leading investment management and stockbroking firms.
Thorough yet flexible, Blankstone Sington provides a bespoke, trusted service and prides itself on being independently owned, meaning the firm isn’t burdened by a rigid ‘corporate view’.
We have worked in close association with other professionals – including financial advisers – for many years, supporting their clients and businesses through our range of services, including: Bespoke Investment Management, Model Portfolio Service, Inheritance Tax Portfolio Service and Stockbroking.
Our approach is tailored to meet individual clients’ needs and objectives. We will work collaboratively with you to review and develop suitable investment strategies and create a portfolio to meet specific financial targets and goals in order to help your clients to achieve their aims, delivering the same high standard of service that you provide for your clients.