Building A Legacy Through Smart Forward Planning

Stratagem Financial Planning have helped many partners that have been left in a tough spot when their spouse passes away. One widow, in particular, was facing a huge financial hole for her end-of-life planning…

The case

A couple of years ago, Mrs. J was referred to us by her sister, who is existing client of ours, and who thought we could help her with a difficult situation. She was retired and in good health, and was living abroad when her husband suddenly died. After dealing with the bereavement and his funeral expenses, she decided to sell up and move back to the UK for her family. But there were several hurdles in her way…

Mrs. J’s country of residence has its own legal ownership systems. These complicated and dragged down the sale, until the property was going for a substantially lower price – well below the typical market value, in fact. Buying a good house on British soil was out of the question and renting the only option. With personal funds of £140,000, and the loss of some of her late husband’s pension, she faced an income shortfall of £5,700 per annum. It wasn’t close to the quality of life she was seeking for her remaining years.

When she came to Stratagem Financial Planning, Mrs. J was thinking, too, about the legacy she’d wanted to leave for her children. Our team got to work, hoping to free up her spending power and give her total peace of mind.

The solution

Our client knew she wanted to set seven years of expenditure shortfall aside to feel comfortable, and hoped that the excess capital could achieve a real return. The sum of £100,000 could be used for capital growth, and hopefully supplement income for the rest of her life. Our role was to forecast timelines, income and expenditure changes, and then relate this to potential gains with various risk models based on her individual profile. Mrs. J could then make an informed decision on the route to explore. Here’s what happened:

  • Lifetime Cash Flow Analysis. First, we undertook a study (via CashCalc, our financial modelling software) to determine two solutions. One was retaining cash funds at 0.5% interest. The other was a £100,000 capital – aligned to ‘cautious risk’ investment – with both options set against a 2.5% annual rate of inflation.
  • The retained cash fund avenue was sized up. We found that, if Mrs. J did nothing with her finances would have been depleted by the projected age of 96, leaving her accounts dry for any care fees and leaving no inheritance.
  • A cautious capital investment, however, would bring her £132,487 at the same milestone. This was partly based on IMA averages over 26 years, factoring potential losses, gains, and the charges she might face over such a period. Mrs. J was pleased. She could finally live again, free of worry, whilst embarking on a plan she could trust.

Want to become one of our success stories? Speak to the Stratagem Financial Planning team today.