Basic Chat with an IFA

Linton

6022tivo wrote: »

How can I define an end game, the end could be tomorrow? I genuinely don't have one.

You could die tomorrow but unless you are seriously ill I believe the chances are higher that you will win a sizeable prize on the lottery - perhaps you should buy a ticket. Life expectancy is around 86 and you have a 50% chance of living longer. A sensible possible end game would be to decide on an early retirement date and use your excess money to finance the gap until you receive your pensions.

Some of the cash isa / index linked things will help my Son buy a house, I'm thinking 100k of it to help him on the ladder that will be pretty soon.
He will be my beneficiary, him and his children.
I will have to look into inheritance tax, I believe my allowance in my situation (Some unused from my late spouse) is around £550k, then I think there are new rules about leaving my house to my children which will help.
Not sure how pension funds are subject to inheritance tax.

Money left in your pension fund on your death goes to your nominated beneficiary outside your estate, there is no IHT.


You could plan to leave everything to your son, but assuming you are of average life expectancy that may not be for another 40 years or more (assumng your pension in 2039 is when you are 65). In this case your son will be on his way to retirement himself. Perhaps a more efficient use of your money would be to give your excess income to your son now rather than leave it until he presumably has his life well sorted out.

Albermarle

As I understand it, if I lost my job I can take some of this pension back (25% is it? Tax free at the age of 55)

You have made a few comments ( like the above in bold ) that seem to show your understanding of pensions/financial products could be better. In this case a one off consultation with an IFA , maybe costing a £1000?( rather than £100) , could be money well spent.

6022tivo

Linton wrote: »

Money left in your pension fund on your death goes to your nominated beneficiary outside your estate, there is no IHT.


You could plan to leave everything to your son, but assuming you are of average life expectancy that may not be for another 40 years or more (assumng your pension in 2039 is when you are 65). In this case your son will be on his way to retirement himself. Perhaps a more efficient use of your money would be to give your excess income to your son now rather than leave it until he presumably has his life well sorted out.

Good news about the IHT.
I do plan to give him 50% of his first house purchase as a lump sum (He doesn't know that yet).
He's got a good money head on his shoulders which is a good thing, and not spoilt financially in any way by me at the moment..

6022tivo

Genuinly thanks, and keep it coming.
I have learnt/confirmed a few new things today.


That I may live to a longer age than I thought.
My Pension pot can be left to beneficiaries without it forming part of my Inheritance Tax Limit.
My DB Pension is a lot more clearer.


Have more things entering into my mind.
If I give my son a lump sum towards a house deposit/purchase.
How does that work for gifting and IHT?

6022tivo

Albermarle wrote: »

You have made a few comments ( like the above in bold ) that seem to show your understanding of pensions/financial products could be better. In this case a one off consultation with an IFA , maybe costing a £1000?( rather than £100) , could be money well spent.

You say could be better, which is not really a help. It was a question that required confirmation?

bowlhead99

6022tivo wrote: »

If I give my son a lump sum towards a house deposit/purchase.
How does that work for gifting

If you gift your son money, it's a gift.

and IHT?

Assuming you are giving it as a one off out of assets - rather than as part of an ongoing pattern of giving money out of your spare income - it is counted as a 'potentially exempt transfer' for IHT. This means it only escapes IHT if you survive for another 7 years. Otherwise it would be added back into your estate as if you had not gifted it and still had the money yourself.

There can be more to it than that, and the first £3k of gifts you make in any year can be ignored for IHT - but with the amount of money involved (likely to be more than £3k for a house deposit, but less than the price of a house), that seems to be the most important bit.

enthusiasticsaver

6022tivo wrote: »

I don't want a proper job, I'm happy with where my things are. It was more a confirming process, especially over my pension funding and making sure I'm doing it the most efficient way.

I am not quite sure why you even want to see an IFA if you are quite happy with where everything is? An IFA has to go fully into your current situation and what your aims and needs are and attitude to risk before he can advise and will certainly not be able to confirm over a quick chat whether you are making best use of your capital and income and if you will reach your financial objectives when you need to. That will require more than a quick chat and certainly cost more than £100. You do not seem to be particularly well informed when it comes to investing and if you are ploughing £38k into your pension then you need to know where that is being invested. I would also think you are in danger of hitting the LTA and if you are only using 25% of your salary you can probably retire a lot earlier than you think.

You seem to be more worried about how you will occupy yourself in retirement rather than the financial aspect. Maybe time to explore life outside of work like getting a new interest or volunteering. Do you not travel or have hobbies?

Joe9090

bowlhead99 wrote: »

If you gift your son money, it's a gift.

Assuming you are giving it as a one off out of assets - rather than as part of an ongoing pattern of giving money out of your spare income - it is counted as a 'potentially exempt transfer' for IHT. This means it only escapes IHT if you survive for another 7 years. Otherwise it would be added back into your estate as if you had not gifted it and still had the money yourself.

Could you please expand on that a little. I thought you could give as much as you like,whenever you like,and providing either partner survives for more than 7 years no IHT would be payable.
I had a look here https://www.gov.uk/inheritance-tax/gifts and I am still unclear about your rider
'rather than as part of an ongoing pattern of giving money out of your spare income'

Linton

Joe9090 wrote: »

Could you please expand on that a little. I thought you could give as much as you like,whenever you like,and providing either partner survives for more than 7 years no IHT would be payable.

You can give as much as you like but if you actually made the gift yourself then all of the gift could lead to your estate paying the corresponding IHT if you died within 7 years. To split the gift between spouses would require that each demonstrably gifted half the money.

I had a look here https://www.gov.uk/inheritance-tax/gifts and I am still unclear about your rider
'rather than as part of an ongoing pattern of giving money out of your spare income'

If your income is in excess of your total expenditure including gifts over 2-3 tax years then those gifts will be disregarded for IHT purposes. The gifts need to be part of a regular pattern, not an isolated one-off payment. If you want your executors to make use of this you will need to keep very good records of gifts, income, and expenditure.

fred246

This thread really made me laugh. IFAs really are the opposite of fair days work for fair days pay men. To have a little chat lasting a few minutes they want 0.5% of your pension. There have been loads of threads and they keep saying that's the 'going' rate. So someone with a £600000 pot is expected to pay £3000 for a little chat.