Simplification challenge

fcandmp

My father-in-law has recently asked if I would help him to simplify his estate and given me access to his investment details. I should say that he is recently widowed, 83 and just bubbling over into higher rate tax with his pension and investment income. He hasnt really focused on the situation with his finances, as has always had sufficient to get by hasnt wanted the hassle of sorting it out.

in looking at his finances I have found investments to be worth around £165,000, of which approximately 50% are wrapped in ISAs (mostly stock iSAs with a range of fund managers and nearly all equity based). There are also four lines of single stock (mainly from privatisation offers) all clearly unwrapped. One of the stock ISA holdings was my mother-in-law's investment before she passed, which has now been transferred unwrapped and the provider tells me they dont currently have the procedures to re-wrap it without him using this year's ISA allowance, which has not so far been used.

He tells me his priority is to simplify the investments so that on his passing it is straightforward to deal with. I have explained that it is not tax efficient and a number of the funds have associated charges of 1.6% and cash ISAs paying less than 1%. Beyond simplification he clearly wants to leave a legacy to his three children, but has no sense of the risks associated with the asset allocations and has never rebalanced the portfolio.

Some forum members may be used to such a tangle and I wondered what sequence I should be helping him address them? Also, from what I have explained whether there are any other things I should investigate.
Many thanks

BLB53

He tells me his priority is to simplify the investments so that on his passing it is straightforward to deal with.

My first thoughts would be to move away from the individual shares and the higher charging funds and transfer the proceeds to a low cost, globally diverse index fund like Vanguard LifeStrategy. By selecting the LS20 or LS40, you will automatically reduce risk by holding a more balanced portfolio.

There may be CGT implications for the non-isa funds but those investments in ISAs will not be affected.

xylophone

Re IHT and transferable nil rate band.

http://findlaw.co.uk/law/tax/taxes/inheritance_tax_taxes/9485.html

Re transferable ISA allowance to widow/widower

https://www.gov.uk/individual-savings-accounts/if-you-move-abroad-or-die

"If your spouse or civil partner died on or after 3 December 2014, you can inherit their ISA allowance.

As well as your normal ISA allowance, you can add a tax-free amount up to the value they held in their ISA when they died.

Contact your ISA provider or the provider of your spouse or civil partner’s ISA for details."

https://www.jameshay.co.uk/docviewers/documentview.aspx?DocumentID=3049 might be worth a look.

Has he thought of making modest gifts to his heirs now, perhaps just enough to bring his income under the 40% band?

If he wants to keep the cash ISAs he can do better than 1%.

http://www.thisismoney.co.uk/money/saving/article-1583864/Best-savings-rates-Isas-Cash-Isa-accounts-fixed-rate-Isas.html

Does have the best platform for his ISA investments?

http://www.thisismoney.co.uk/money/diyinvesting/article-1718291/Pick-best-cheapest-investment-Isa-platform.html

Consider using his isa allowance for this year and that of his late wife once the provider has sorted this out?

He might want to consider selling the individual shares in favour of a fund?

If he wanted to consider taking professional advice

https://www.unbiased.co.uk/