Where there's a will, there's a way
Retirement and pension planning aren't just a matter of finance and saving, you must also be clear what you want to do with your retirement and take all factors into account.
Always take advice at an early stage and constantly review your circumstances and plans. It can often be the case that you will be able to achieve more than you thought and perhaps give up work earlier than you expected, if you put the appropriate plans in place at an early stage.
Recently, we had a couple who came to us who had been retired for some time and had just received a substantial inheritance from the wife's parents. But this has come too late to change their lives.
The pity is that they were a relatively wealthy couple who worked for longer than they wanted to, or had to, even though they always knew they were going to receive this inheritance and knew roughly how much it would be. If they had factored it into their retirement plans at an early stage, they could have used their savings and investments differently, drawing on those funds earlier to enjoy an early, active retirement, secure in the knowledge that the inheritance would support them later in life.
It was too late for us to guide them on their retirement planning, but we were able to advise them on the related matter of what to do with the inheritance. They had no use for it, being too old for flash cars or luxury holidays, but if they took the money to leave to someone else or to give away, it would be subject to inheritance tax twice.
In these circumstances, the solution is deed of variation. With this, you declare to the executors of the estate that you don't want the money, thus avoiding the tax liability, but you can choose to put it into a trust for somebody else or gift it to another person or a charity. If you are not in a position to benefit from an inheritance tax yourself, there is no reason why the taxman should.
The lessons are: plan early, take account of any likely inheritance, seek advice and constantly review your plans and circumstances.
Finally, if, as in this case, something has not been planned for, do contact us, because there is always a way of minimising any downside.
It is important that no actions should be taken without first taking advice. Personal circumstances and an individual's appetite for risk means that the advice for one person may not be the same for everyone. The information in this blog or any response to comments should not be regarded as financial advice. Reeves do not advise on Defined Benefit pension schemes. Reeves do introduce a third party specialists in areas of work we do not cover. Please note: This article has been published with the use of a fictional character to outline a case study.