Turning a bad situation around:
A self-employed client had just turned 60. Due to poor advice from a previous adviser, a pension fund in excess of £405,000 was reduced to £181,476. The entire pot was invested in a Global Property Fund. Our client was desperately worried about his future ability to retire.
After 6 years of carefully active investment, funds in the client’s pensions are now £353,706, even after paying £11,000 in income in the last year.
Protecting a business for the future:
Two directors held a 50% each shareholding in a business valued at £3,000,000. If one of the directors died, their shares would pass to their spouse, leaving the surviving director with a 50% shareholder with no experience of the business. The directors felt that the business would struggle due to the loss of a key player and the deceased’s spouse would need financial security. The value of the business would be significantly reduced.
Beaumont advised that both directors insured themselves for £1.5 million in trust for the benefit of the surviving director, and that they then completed a cross option agreement. This means that on the death of either director, the surviving director receives £1.5million and the deceased’s spouse receives the shares valued at £1.5million. The cross option agreement means that if the remaining director wishes to buy the shares, the spouse must sell, and if the spouse wishes to sell, the remaining director must buy. As this is an option, and not a contract, there would be no tax implications.
Disillusioned with pensions:
A couple who own a manufacturing business approached Beaumont having become very disillusioned with pensions. One pension was valued at £120,000 after the couple had contributed £125,900 over three years. Another pension was valued at £57,910 having contributed £52,000 over 21 years!
It was necessary to establish an ideal amount of money which would need to be accumulated to maintain their ideal lifestyle in retirement. Goals for the future were discussed and based on the outcome of the risk profile Beaumont were able to advise on much more suitable funds which allowed them to use their pension as an asset. Further financial security has been gained by ongoing management of their portfolio and they are now enthusiastic pension investors who are referring new clients.