In the depths of lockdown in the summer of 2020 we met Bob and Mary (on Zoom, of course) who were recommended to us by an existing client.

Bob and Mary have two young children and Bob’s business he set up a few years ago was expanding rapidly.

They had just bought their first house and were concerned how to manage their finances. Bob’s business is in a risky sector of the economy, and they were worried what would happen to their other assets if the business struggled or failed and how to protect their family in case anything happened to Bob.

In summary, they were confused what to do with their money and keep it and themselves safe.

🦺 First things first, we protected the family. Both Bob and Mary had life assurance policies set up by their mortgage broker, but neither were in trust. We set up a trust for each policy that could potentially save them £800,000 in inheritance tax. What appealed to Bob and Mary even more was with this cash being held in trust it would be kept in their family, beyond the reach of creditors and any undeserving future spouses. We call it “bloodline protection”.

We also set up critical illness policies for both Bob and Mary that would pay out Bob’s annual earnings if they suffered a serious illness in the next 25 years.

The final leg of protecting the family was Wills and Lasting Powers of Attorney. Bob also had a business specific Lasting Power of Attorney; he trusts his sister implicitly and wanted her to wind down the business in an orderly fashion should he lose mental capacity. The Wills also included capturing the value of the business in a trust which again appealed to Bob and Mary’s wish to protect as much of their wealth as possible for future generations.

The next stage was to invest the cashflow generated by the business as tax efficiently as possible. Within reason, Bob and Mary wanted the cash out of the business on a routine basis – if the business failed, they didn’t want to lose everything!

We spoke to Bob’s accountants who agreed with adding Mary to the company’s payroll, thus improving the tax efficiency of their earnings. We then maximised employer pension contributions for both of them and maximised their Stocks & Shares ISA allowances too.

We also set up and maximised pension contributions for their new-born twins 🍼. You’re never too young to start investing!

All this was funded monthly which takes all the pain, hassle, and admin headache away from doing so on an ad hoc basis and Bob and Mary barely notice as everything happens automatically on the first day of each month – they told us they really appreciate the automatic nature of making these investments as it’s so easy.

There’s more on our agenda now but a little over 12 months from meeting them, Bob and Mary’s finances are happily on strong foundations. 💪 🧰