Opes Wealth Trust met with Mary, a 48-year-old self-employed GP, who is married to Joe. Joe is on long-term disability benefit from a previous employment. They have two young children. Having firstly carried out a detailed fact-finding exercise, we presented the Opes Wealth Trust Financial Solutions Service. This is broadly highlighted as follows:
(1) Devising a Financial Plan to include:
- Setting & reviewing an agreed specific financial target
- Pension/retirement planning
- Finance (debt management, debt restructuring)
- Investment strategy and investment risk profiling
- Cash flow planning/ family savings /children’s education
(2) Estate Planning:
- Organising affairs relating to the estate/family wishes
- Comparing the clients Will (Irish/foreign) with their stated wishes
- Assisting in defining certain roles Executor/Trustee/Guardian
- Creating a central Statement of Affairs
- Assisting in updating their Will
(3) Tax Management:
- Providing an indicative income tax computation
- Assessment of effective tax rate
- Outline of general tax reliefs available
- Calculation of allowable pension contribution
- Cash-flow budgeting plan for tax bill.
We have detailed below some of the specific findings from our analysis:
- We helped Mary and Joe identify their financial objectives and the level of after-tax income they wanted at their desired target date (age 60 for Mary).
- We outlined the level of assets that are required to meet their specific target.
- We assessed Mary and Joe’s progress against this target based on their existing assets and where they would likely be at their target date should they just continue to do what they were then doing.
- Once we identified the financial gap between where they would be and where they wanted to be, we outlined the additional funding needs to reach their stated financial goal.
- We outlined tax-efficient planning tools that are available to them and how these can be used to significantly increase their ability to create wealth and reach their financial objectives.
- We outlined a plan for providing for their children’s future education.
- We analysed their investments and detailed the annual returns that would need to be achieved to reach their financial target.
- We compared their investment strategy to their stated attitude and tolerance to investment risk. We discovered that they had a higher tolerance to investment risk when compared to their actual risk profile. This had implications for investment strategy going forward.
The right pension structures and strategy
- We provided a comprehensive outline of the pension planning tools available to Mary.
- We outlined the new requirements for GPs with GMS income and the restrictions applicable to pension contributions. Mary had not been aware of these significant changes.
- We detailed the costs and benefits of the most appropriate structure for her.
- We provided an outline of the options available at her retirement date
- We provided an outline of the investment solutions available.
- We provided a number of early retirement options for Joe which hadn’t been considered by them up to that time.
- A comprehensive analysis of the protection requirements was undertaken.
- Mary is the primary income earner with two young children. It is essential therefore, that Mary’s income is protected in the event of illness, disability or death. We put the appropriate level of protection in place and kept the costs reasonable by focusing on the risks she faces until age 60.
- Combined with this, we restructured Mary’s protection benefits in a more tax-efficient manner resulting in further monthly cash flow savings.
- We highlighted the importance of having an easily accessible emergency fund in place.
- As Mary and Joe had no Will, we highlighted the serious implications that this can have on their estate and their child’s welfare in the event of their untimely death.
- We held a number of meetings with Mary and Joe teasing out their wishes and who they would like to perform certain roles e.g. Executor, Trustee and Guardian.
- We worked with Mary and Joe in devising a financial model that provided the Guardian with access to funds, both on a regular annual basis and with regard to specific needs.
Personal Tax Planning
The final part of the report focused on Mary’s medical practice. Mary outlined to us that ultimately she wished to sell the practice before she retired. We highlighted appropriate solutions and structures that allow the efficient extraction of income from the business as well as the efficient accumulation of long-term capital value. We also outlined some very tax-efficient mechanisms that might be used when she decided to sell the business.
As a result of the Opes Wealth Trust planning exercise, Mary and Joe now have a focused and efficient financial plan in place that is appropriate to their specific circumstances. They have a clear understanding of where they are currently at, where they need to be at their financial target date and a detailed plan on how they are going to achieve their financial objectives.