An integrated approach to retirement planning and family wealth preservation – Real life case study

By Rohit Rohela, Chartered MSCI Financial Planner & Managing Director at Finsbridge Financial Planning, a member of Legal Futures Associate, SIFA Professional

In the evolving landscape of financial planning, with pension freedoms for retirement benefits and increasing life expectancy, integrating retirement and wealth preservation together is of paramount importance. This blended approach ensures that individuals enjoy their retirement whilst also securing their family’s financial future. By studying the following real life case study, we can glean insights into how this joined up approach works in practice.

Case Study 1: The Thompson Family

We will explore the story of the Thompson family (names changed for confidentiality).

The Thompsons, aged 62 and 59, were nearing retirement (planned in 3 years at the time of advice, they were aged 65/62) with a family business (limited company) and two grown up children (34 and 32). Their primary concerns were a comfortable retirement and ensuring the wealth accumulated in their personal estate and business stayed within the family. They wanted to use their hard-earned money to provide them a good lifestyle and then leave a legacy for their children when they passed away.

They had a stocks and shares ISA (S&S ISA) and Self Invested Personal Pension (SIPP) each with healthy balances.

LifeTime CashFlow Modelling: Establishing the foundation

The first step was to gauge the Thompsons’ post-retirement needs. This involved the following steps as part of the Finsbridge Lifetime Masterplan:

  1. Painting a picture of their desired lifestyle – they would like to relocate to the coast and downsize to a 2-bed sea facing bungalow from their 4-bed detached house in the South-East of England (this will be sold at retirement).
  2. Modelling their projected discretionary and essential expenses – they would like the option to eat out more often, travel to 4-6 new holiday destinations every year and buy a new car at retirement, which they would then renew every 4 years. We estimated the monthly cost of providing this in today’s terms.
  3. Modelling paying off all the debts: The mortgage on their main home had a term remaining of 8 years, we modelled paying it off by retirement age – the choices were between making overpayments now and paying it off later using the proceeds of the sale. The clients agreed to use the proceeds of the sale of their main home and the business to pay off the mortgage.
  4. Establishing what they would like to leave as a legacy for future generations – they would like to help with school/university education for their grandchildren in the future. The children are well settled, so would not need to rely on the inherited funds themselves.


Investment strategy – Achieving the magic number

The Finsbridge Lifetime Masterplan provided us with a blueprint of the Thompsons’ desired retirement and milestones for their income and capital needs.

We then started working on a tailored investment strategy geared to providing them what they needed, whilst keeping their tax liabilities as low as possible:

  1. Structuring the Asset Strategy – we analysed the extent to which the non-pension assets could provide the retirement income needs. As pension assets are free of Inheritance Tax, it was clever planning to use other assets to provide their income needs, contrary to common perception.
  2. Shaping the Access Trajectory – our modelling showed us that their Stocks and Shares ISAs would pay for their income needs for the first 10 years of their retirement. After this, they could use the capital released from the sale of their business.
  3. Deploying the capital released from downsizing – One part of the capital released would pay off their mortgage. For the remainder, our tax efficient planning suggested an offshore investment bond that would be an excellent solution. This was an insurance-based investment product that would provide the Thompsons a tax deferred income (treated as capital withdrawals) up to 5% of their initial capital, which they could increase or decrease as they liked.
  4. Extracting Capital from the business – We advised the Thompsons to maximise their company contributions to their pensions (£60,000 annual allowance – saving corporation tax of 26.5% and dividend tax of circa 33.75%). We set their investment strategy to capital preservation for the monies they would need in the first 3 years of retirement, leaving the remainder to grow whilst invested in shares/equity based assets (this will be evaluated at every regular review (every 6 months or yearly as per service level).


Business exit and succession planning: Securing the family legacy

Given that the Thompsons’ business was one of the primary sources of family wealth, a robust exit and succession plan was crucial.

We started working on a methodical approach:

  1. Valuing the Business and Legal Advice – We introduced the clients to accredited brokers in their industry and trusted chartered accountants to accurately assess the expected sale value of the business. This would include consultancy on restructuring the business over the 3 year period prior to sale – to reduce unnecessary costs and improve the product/marketing for maximum profitability. We introduced the clients to a trusted law firm in the local area, who would help them set up robust contracts for sale and exit terms/earn out etc.
  2. Creating a Robust Legal Framework for Succession – The same law firm we referred them to for the business contract advice have a wills and trust division, which helped them set up a comprehensive will and trust framework, as well as Lasting Powers of Attorney for Health and Welfare. The ownership of their family home was split to tenants in common, with the Nil Rate Band (NRB) being “banked” on first death by moving £325,000 of the equity in the property into a NRB Trust – with the surviving spouse being the trustee. When both pass away, their entire estate would move into 2 Beneficiary Protection Trusts (Discretionary Post Death Will Trusts) for their children, thereby protecting the assets from dissipation due to divorce, creditor claims, bankruptcy, future IHT when the assets pass through the bloodline etc.
  3. Deploying the Sale Proceeds – When the business was ready for sale, we updated the cashflow plan. This suggested the proceeds of sale were surplus to their retirement needs. We agreed to invest these into a portfolio of Business Relief Qualifying Investments. These are specialist managed investments that provide IHT relief (in this instance as the investment was made from business sale proceeds, the IHT exemption was immediate at the point of investment. For personal assets, the investments have to be held for 2 years to qualify for IHT exemption as part of Business Relief – BR). It was agreed to move a proportion of these assets into the Discretionary Beneficiary Protection Trusts. It is worth noting that this did not trigger any Chargeable Lifetime Transfer Tax (as the BR qualifying assets were exempt from IHT in the first place). This helped reduce the total size of the Thompsons’ estate to below £2 million – that enabled them to reclaim the full Residence Nil Rate Band (RNRB). This negated the effect of their RNRB tapering down (happens if the combined estate is over £2 million.


The Thompsons’ case highlights the significance of an integrated approach to retirement planning and family wealth preservation. By considering both the present and the future, they could retire comfortably and ensure that their legacy remained intact for generations to come. For families with substantial assets and businesses, such a comprehensive strategy is not just a luxury but a necessity. This is where collaborating with expert financial planners is a powerful value add for legal professionals.


This financial advisory company is listed on the SIFA Professional Directory of financial advisers (London Region) – to view their details please Click Here


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