One of our clients had a reasonable investment portfolio and a house of large value. She is a widow and whilst she had income, the amount was not as high as she would like.
In discussion with the client and her children, we suggested an Equity Release Scheme were a mortgage is raised on the home and then the proceeds are reinvested.
With careful planning for income tax, we were able to generate from the lump sum invested further income to the client to help her enjoy life that little bit more in a tax efficient manner. The enhanced income also allowed her to help her children from time to time. The client could also remain in her own home and live comfortably.
The new investment was ring fenced into a Trust arrangement, such that after seven years, the investment is not counted in her estate for death duties.
The client received the income and the children are likely to receive more on her passing through the inheritance tax savings.