am I crazy?

boglehead

Archi_Bald wrote: »

boglehead, bowlhead, blowhead....:rotfl::rotfl:
Thanks to all the heads for the light entertainment.

Archi Baldhead

Ha ha ha:rotfl:

atush

I still feel uneasy about putting some cash on something i have no control on until i am 57 - especially since i want to retire earlier than that.
I am also concerned about the fact that in case somethg happens to me after this age, my family will only get 45% of what was put in... As i believe the pension cannot be wrapped in a trust.

Gosh, so very Wrong!!

You can have 100% control of your pension- unless you choose a single share/ managed fund or with profits plan. You decide where and how it is invested- if that isn't control I dont know what is?

AS far as something happens to you and your pension and you are younger than 55? 100% of it is inheritable OUTSIDE your estate by you beneficiary- give it to the kid as the wife can inherit the rest tax free.

But even if you wanted her to inherit the pension too
- it would again be tax free inherited by her as pension pot outside the estate. The only time it is taxed (and that is supped to go down from 55% shortly) is i you want to take the money tomorrow as a lump sum. if inherited by the wife, she should still be able to draw it as and when under normal income tax rules.

Someone like you, with assets and income to protect from tax, REALLY needs some independent advice as you are clearly not read up on the rules and could save yourself both tax and aggravation and your heirs some tax?

kidmugsy

boglehead wrote: »

I am also concerned about the fact that in case somethg happens to me after this age, my family will only get 45% of what was put in...

i) Wrapping assets in a trust does not, of itself, avoid IHT.
ii) The 45% figure is, broadly, wrong. (a) If you die leaving a widow, she gets the whole lot tax-free, if uncrystallised, or continues drawdown or buys an annuity if the pot was crystallised and in drawdown. (b) But suppose instead you don't have a widow or dependants, and your pension has been crystallised and is in drawdown. The 55% tax-like rate is anyway going to be reduced to some figure yet to be announced: for the sake of example 40% i.e. the same as inheritance tax. Then your assets would take the same hit as any NISA assets.

boglehead

atush wrote: »

Gosh, so very Wrong!!

You can have 100% control of your pension- unless you choose a single share/ managed fund or with profits plan. You decide where and how it is invested- if that isn't control I dont know what is?

AS far as something happens to you and your pension and you are younger than 55? 100% of it is inheritable OUTSIDE your estate by you beneficiary- give it to the kid as the wife can inherit the rest tax free.

But even if you wanted her to inherit the pension too
- it would again be tax free inherited by her as pension pot outside the estate. The only time it is taxed (and that is supped to go down from 55% shortly) is i you want to take the money tomorrow as a lump sum. if inherited by the wife, she should still be able to draw it as and when under normal income tax rules.

Someone like you, with assets and income to protect from tax, REALLY needs some independent advice as you are clearly not read up on the rules and could save yourself both tax and aggravation and your heirs some tax?

Thanks Atush - the above makes a lot of sense. I also agree about your suggestion to seek tax advice from a professional, as our estate, despite being at the "beginning" of our prof life, is above 7 figs

Archi_Bald

boglehead wrote: »

....our estate, despite being at the "beginning" of our prof life, is above 7 figs

What are you doing with an £800K mortgage if you have an above 7 fig estate?

boglehead

Archi_Bald wrote: »

What are you doing with an £800K mortgage if you have an above 7 fig estate?

Paying it off slowly... 45% LTV gives me access to a great rate ie 1.9% right now, that I can remortgage in 6 months and lock myself for 2.5-3.0% over 5yrs... No real interest in paying off aggressively, if i can get a higher return than that.

The rest in in ISA, pension, taxable accounts and cash (emergency), which yield more than that.

TheTracker

boglehead wrote: »

Paying it off slowly... 45% LTV gives me access to a great rate ie 1.9% right now, that I can remortgage in 6 months and lock myself for 2.5-3.0% over 5yrs...

2.19 5 year fixes available. Looks like it was worth waiting 6 months.

kangoora

£893k @2% = £3785/month

£893k @9% = £7494/month

I can remember mortgage rates being 15% in my lifetime

Something to think about?

jimjames

suebfg wrote: »

I must be missing something .... with a mortgage debt that size, my priority would be clearing that asap!

With those rates I'm in the camp of investing rather than paying down earlier. In fact ive just taken out significant new mortgage debt fixed at 2.49% rather than taking the money from investments as I think I can earn far better return from investing than the mortgage rate.

DiamondLil

kangoora wrote: »

£893k @2% = £3785/month

£893k @9% = £7494/month

I can remember mortgage rates being 15% in my lifetime

Something to think about?

Ouch ! I can remember paying 15% mortgage rate.......:(