Options for investing capital to provide retirement income

worried50

Thanks. Yes you are right, and it's the longterm she's worried about rather than the present, now my dad won't collect his full pensions and inherit. I guess it is part of dealing with grief and fear of being alone, knowing that financially at least, it's going to be ok.

I have today spoken with my grandfather who had already been considering the impact of my father's death on my mother and us re his estate. He is due to meet with his lawyer in the next few weeks, who will no doubt run through options with him and advise if a trust would be suitable.

jamesd

I'm not sufficiently familiar with the taxation to comment sensibly without doing more research than I can do right now but I think you're right. Tax is a disadvantage but the advantage is protecting the capital. The person receiving the income if a basic rate tax payer might be able to get some of the tax back, I've read something about that but not sure it would apply.

Tax isn't the main point, though. It's to allow money to go in the ways desired, with trustees having flexibility to adjust to do that when circumstances change.

If you do have children and are interested in the skipping generations approach please do let those parents know that you'd like them to use that method to reduce IHT liability for some percentage of anything that might head in your general direction. Mostly to tell them, go ahead and do this in planning if they like, you think it's sensible.

All of the above is something for that generation to get professional advice on, best you can do is say you like tax efficient planning to skip generations. If you do. Your mother can say the same and perhaps mention life interest trust as an approach that she'd be happy with, if she is - I think she will be based on her opinion about buying an annuity. One major penalty of annuities is that nothing gets inherited, so it's one reason why people may dislike them compared to income from investments.

I'm confident that on the numbers given your mother will be entirely fine so far as day to day expenses go. It's just a case of how much extra she has to travel and such.

If she's not familiar with investing and nobody else is very familiar with it either, she should get the help of an IFA to get an income portfolio put together for her in a tax efficient way. That will use investments within a stocks and shares ISA because income from income-producing investments within that is tax free. It probably wouldn't be directly holding shares, just the usual sort of unit trusts. Worth asking for an opinion about the recommended investments here also.