Frequently Asked Questions

We want every client to consider Estate Capital to be their very own personal and trusted adviser.

Frequently Asked Questions
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Financial Advice

Our initial client meetings are offered without cost or obligation. We will meet these costs as we are yet agree how best we can work together.

We think it is important to offer clients simple, fair and transparent fees. We aim to ensure value from a well-resourced advice service that aligns our mutual interests. Our charges are benchmarked against national averages every year to ensure that we are always competitive.

Our advice and establishment fee is an initial one off fee based upon the capital sum invested or the monthly contribution made into an investment or pension plan we have researched and recommended. This fee starts at 2% but reduces to 0.5% dependent upon the size of the investment.

New clients are most often introduced to us through a very satisfied existing client that they know. What we do for one, may not suit another, so we need to understand you.

We want to understand your ambitions, your hopes, dreams and fears. Money may be the means but not the objective. We need to understand the future you desire, your values and principles so your financial plan works for you.

We review and analyse existing investments to ensure all holdings are appropriate and market leading. A full review in itself often creates better understanding and confidence. Before making any recommendation we will fully explain why our financial solution is relevant to you. We always consider the tax implications of our advice and ensure that your finances are handled in the most tax efficient way possible.

All of our recommendations are fully explained in a comprehensive Suitability of Advice letter. This letter covers the reason and relevance of our recommendations. The details of the plan, the selected investment, your capacity for loss, attitude to risk and taxation implications will all be covered. We also provide policy key features, investment fact sheets, specific reports and illustrations of benefits.

If you are happy with our recommendations we will implement them on your behalf with the chosen financial institution along with any trust documents that may be relevant.

Financial advice is not just for today but potentially for the rest of your life. We want clients able to make well informed financial decisions that are right for you now and for the future.

For your planning to remain relevant and your investment choices reviewed we will offer a contract of ongoing service. We will discuss which level of our four service levels is appropriate for you.

Investment Management

All investment carries risk. We can manage risk to acceptable levels of volatility through the blending of different types of assets that behave in different ways. Asset allocation can give investors’ confidence about the likely future range of returns and anticipated average likely return for each risk category of portfolio. We publish these returns every six months.

Each portfolio has a published anticipated average rate of return. This figure is the gross annual anticipated return but is not guaranteed. We publish our past five years cumulative and discrete performance as measured against the most relevant national risk related benchmark every six months. We are pleased to report that our portfolios consistently outperform the recognised national benchmarks.

We recommend that investors stay invested in our portfolios for a minimum of five years. This is due to the nature of investment and the time needed to participate in an economic growth cycle.

The longer an investment portfolio is left to grow the more that compounding growth factors will improve overall returns.

This does not mean that investors cannot access their capital from the portfolios at any time without penalty.

The minimum amount of money one can invest is £5,000 single payment or £100 pm regular contribution. There are no maximums.

All our portfolios comprise of daily traded funds so your commitment to an investment is simply as long or as short as you wish. For monthly savings the same applies.

Pensions & Retirement Planning

Pension funds are long term savings plans and build value the longer they are invested. There is a great advantage in starting to build a pension fund as early as possible. Retirement funds benefit from a combination of tax relief and tax free compounding growth. Much of the capital value within a fund at retirement is built up in the earlier years as they have the longest to grow. Starting early gives retirees the option of lower overall cost of contributions, a larger fund and therefore either higher income at normal retirement or the option to retire earlier.

While there are annual contribution allowance limits, the simple answer is as much is as affordable. The greater the contributions the greater the tax advantage and ultimately the larger the pension fund.

Often employers offer pensions with matched funding. The employer will match the level of the members contributions. This is very beneficial and should be taken up.

Invariably an employer will make contributions in addition to the member’s contributions. These added contributions provide a significant advantage and should be taken up as early as possible.

The earliest age you are able to take benefits from a pension fund is age 55. One can take benefits and can also continue to work. Full retirement from a personal pension is very flexible and can take place at any time after age 55. Occupational pensions will have a set retirement date as benefits are calculated to this date. The age is usually 65. Early retirement is often available but with an early retirement penalty charge.

The Department of Work and Pensions (DWP) offer an on-line forecast service called a BR19 request. A BR19 report provides a national insurance contribution history, currently accrued state pension benefits and a forecast of your basic state pension at your actual state pension age.

The decision over either an annuity or draw-down is often determined by the extent of other assets, the size of the pension fund and your attitude to risk. Both forms of pension income are available at the same time.

If you are fortunate to have built a large pension fund, have other assets to support retirement and have a balanced or speculative investment outlook then draw-down may suit you.

If you have limited assets and your pension is your only retirement asset you may wish to be certain and secure in the lifelong guarantee an annuity offers.

All investment carries risk. We can manage risk to acceptable levels of volatility through the blending of different types of assets that behave in different ways. Asset allocation can give investors’ confidence about the likely future range of returns and anticipated average likely return for each risk category of portfolio. We publish these returns every six months.

Each portfolio has a published anticipated average rate of return. This figure is the gross annual anticipated return but is not guaranteed. We publish our past five years cumulative and discrete performance as measured against the most relevant national risk related benchmark every six months. We are pleased to report that our portfolios consistently outperform the recognised national benchmarks.

Wealth Management

Wealth management is the efficient management and co-ordination of each aspect of your overall estate. This includes cash deposits, investments, loans, insurance protections, pension funds and taxation planning.

We regularly review our client’s assets against agreed risk levels and national industry benchmarks in order to match risk and expectations.

We review at each meeting whether your capacity for loss and your appetite for risk remains constant or changed. We act on any changes by adapting your plan.

We review and update our in house investment portfolios every six months. We assess our asset allocation and fund selection from detailed and extensive research completed both in house and via third parties. Third party investments are monitored in the same way to ensure efficient use of capital.

Each week we research the highest paying deposit accounts. This weekly listing helps us advise clients on the best home for cash deposits.

For all clients entering retirement we produce a detailed cash flow model of pension fund capital values and income withdrawal using prudent growth measures. These reports offer clarity and confidence of future income and capital.

We review pension draw-down accounts annually to assess the performance of the underlying funds, current income levels and future needs, changes in legislation and the overall risk and sustainability of the fund.

Any changes in career or family circumstances will prompt the need for a review of personal protection to ensure those who need it are protected fully and effectively.

Family Protection

Life insurance often costs less than people expect it to. The monthly premium is dependent upon the level of cover, age, health and lifestyle of the applicant. Once an application has been underwritten, then the final premium can be confirmed.

Life insurance, critical illness and income protection policies are all clearly defined contracts of insurance. If a policy holder fulfils the conditions of a claim then a pay-out will be made. A claim could be affected by any non-disclosure issues at the point of application.

All pre conditions or existing conditions are taken into account during the underwriting process. A final premium offer will take these into account.

If you wish to insure your life for the benefit of your wife or husband or family there is no upper limit.

Income protection policies can insure up to 55% of your taxable earned income. This income can include salary and private company dividends or self-employed net profit. It will not cover investment derived income such as rent.

All single life insurances should be placed in trust to ensure that the person that the life cover is there to protect receives the policy benefits swiftly and without the complication of probate.

This will depend upon your circumstances and needs. Firstly it would be important to clear any family liabilities such as a mortgage and a mortgage protection plan will achieve this objective.

However a mortgage is not the only family outgoing, so to cover the loss of an income, a family income benefit plan or term assurance should be considered.

If the nature of your insurable interests such as a dependent child or mortgage liability has a term that will at some stage end, then a term assurance policy will provide the needed cover over the required term at lowest cost. If however you have lifelong insurance needs then a whole of life policy is more appropriate.

This difference particularly applies to income protection plans. The life assured can apply for protection against the loss of income from a specific occupation, one that is higher paid due to greater skill, education or training as compared to any occupation. An income protection plan will therefore pay out income if the plan holder cannot do the role that they are trained to do irrespective of if they can do any other.

Life insurance is usually a long term insurance and as such a sum assured will reduce in relative value over time due to inflation. Index linked benefits will avoid this. With index linked policies both the sum assured and premiums increase by the retail price index (RPI) each year.

Estate Planning

Inheritance Tax is a tax on death. The tax is applied to your estate if its taxable value exceeds the individual exemption allowance of £325,000. Not all assets held within an estate are taxable as some assets are exempt from inheritance tax.

Assets that are subject to inheritance tax typically include your home, other property, land, deposit accounts, shares, investment funds, insurance bonds, jewellery, art and antiques. Any assets of a similar nature held abroad are also included in your taxable estate.

There is no inheritance tax charged upon transfers on death between married couples or civil partners. Each individual benefits from a current nil rate allowance of £325,000 and therefore couples have a joint allowance of £650,000. Any unused allowance can be transferred to the surviving spouse.

On top of the nil rate allowance, homeowners with children can benefit from the main residence nil rate allowance. This allowance starts at £100,000 per individual in 2017 and rises by £25,000 each year to £175,000 in 2020. This allowance only applies to the value of the family home when inherited by the home owner’s children.

Other exemptions are given to privately owned businesses and farms that if trading are exempt from inheritance tax.

The value of the taxable estate above the nil rate and main residence nil rate allowances is subject to a 40% tax charge. If a net taxable estate was worth £2 million after all allowances were deducted then the inheritance tax demand would be £800,000.

The inherited estate is liable to pay the inheritance tax. The liability must be settled or agreed to be settled with HMRC prior to the granting of probate and the estate distribution.

If there are insufficient disposable assets in the estate then other assets will need to be sold to raise the capital.

The estate is required to pay inheritance taxes prior to the grant of probate and the distribution of estate assets to the beneficiaries of the will. Depending upon the nature of the assets, payment can be spread over a period of time. HMRC generally expect IHT to be paid within six months of death.

It is important that to ensure that your assets pass to the people you want them to then you should write a will. A will avoids your estate from being distributed in line with the intestacy rules and gives clarity to your family over your wishes.

Wills can always be changed, re-written or updated.

Pension Transfers

Yes, but it would still need to be in your financial interest to do this.

Legislation will allow this to be done from age 55 but there are likely to be penal tax consequences.

A Defined Benefit Scheme contains valuable guarantees and it may not be in your interest to transfer. It will be an individual decision based on your goals, objectives and individual circumstances. Thorough research and assessment of your situation can help make an informed assessment of the suitability of a potential transfer.

You can pass your pension fund to your children providing the pension scheme you are a member of has adopted the new rules post 5th April 2015. If you are a member of a defined benefit scheme you cannot pass any fund to your children. There may be short term payments to dependent children only.

You will be able to take benefits before the scheme normal retirement age providing the scheme rules permit this. However there may be an early retirement penalty reducing the income if you retire early. These penalties are commonly 4% per annum.

This can only be done if the value is below £30,000. Any pension scheme with a transfer value over £30,000 will require the transfer to be handled by a suitably qualified independent financial adviser.

You do not have to take your tax free cash all at once providing your pension fund is in a flexible draw-down scheme.