Case Study: Inheritor


Client Overview:

A 35-year-old single mum who inherited her father’s estate after his recent passing. The estate was split across property, cash, investments, and a pension.


The Challenge:

Having never had any money to invest, she felt uneducated about long-term savings. She wanted to be educated on making sensible investment decisions for her and her baby’s future. Currently not working due to a career break to raise her child, she was planning to return to work once she secured a nursery place for her baby.

She had already sold her father’s property, using the proceeds to clear her mortgage. Her father’s investments were held across multiple investment accounts with different providers, with the majority in a small number of direct equities.


Our Recommendations:

Consolidation of Investments:

  • We helped our client consolidate her various investment accounts into one platform for ease of management.

  • The new investment strategy included only a General Investment Account (GIA) and an Individual Savings Account (ISA), ensuring she fully utilised her annual ISA allowance and took advantage of her small pension allowance.

Monthly Income Setup:

  • We set up a monthly income from the GIA to help support her household while she searched for a new job. This provided her with the financial stability needed during this transition period.

Building an Emergency Cash Fund:

  • We advised her to keep one year's annual expenditures in cash, including enough to cover her child's full-time nursery fees.

  • This emergency cash pot was placed in an instant-access savings account, paying market-leading interest significantly higher than the interest on her previous account.

  • The cash fund ensured she felt no pressure to take the first job offer and provided her with breathing space to find a suitable role.

Investing Surplus Cash:

  • Any cash remaining above the emergency fund was invested into the General Investment Account (GIA).

  • The goal was to achieve inflation-beating returns and help grow her wealth for the future.

Junior ISA (JISA) Contribution for Her Child:

  • We made a small contribution to a Junior ISA (JISA) for her child, setting aside funds for their future and taking advantage of tax-efficient savings.

Pension Planning – Beneficiary Pension:

  • As her father had passed away before the age of 75, she was eligible to take his full pension account (around £400k) as a tax-free lump sum.

  • We recommended keeping the pension wrapper intact and transferring it as a beneficiary pension in her name. This strategy allowed:

    • Tax-free growth within the pension wrapper.

    • Preserving inheritance tax (IHT) benefits in case of her untimely death.

    • The flexibility to draw tax-free income from the pension if required.

Outcome:

After some time, she secured a job. We then stopped the income withdrawals from her investments, allowing those funds to roll up in the GIA. This strategy provided a larger pool of savings for future personal pension contributions, alongside further ISA and JISA contributions, factoring in her income and workplace pension scheme.


If you’d like to learn how we can help you, contact us or book a free initial consultation with a member of our Bristol office.

Disclaimer: This case study is for informational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor for personalised guidance based on your specific circumstances.