WHY MAKING A WILL IS JUST AS IMPORTANT AS EVER

Many have found the widely-reported decision reached in the case of HeatherRB Ilott unsettling and are concerned about the implications of this judgment on their own Wills.

This case involved Melita Jackson, who died in 2004 leaving nothingto her estranged daughter Heather Ilott; instead she instructed that her £486,000 estate be divided between four charities. After an eight-year battle, her daughter has now been awarded £164,000. Challenging the Will under the 1975 Inheritance Act, Ilott was originally
awarded £50,000. However, as Jackson had stipulated that her executors were to fight any challenge her daughter might make, the case then went to the High Court which ruled that Ilott shouldn’t be awarded anything. The matter finally ended up in the Court of Appeal which ruled that she should be awarded £164,000 to purchase her housing association home and £20,000 to supplement her state benefits.

FACTORS IN THIS RULING
The fact that Ilott could demonstrate financial hardship played a major part in the decision. So too did the fact that her mother had little contact with the animal charities she nominated. Will there now be more adult children challenging the Wills of their parents? This seems unlikely, especially as it has always been possible to mount a challenge under the 1975 Inheritance Act in cases of financial hardship. Nor does it follow that courts will, from now on, disregard a Will that fails to leave money to a particular person, or sets aside bequests to charities.
However, if for any reason you want to exclude someone from benefiting under your Will, you should write what’s called a ‘Letter of Wishes’ to back up the decision, and give this to your executor and ensure that you explain to your family why you have made your decision. Every adult should make a Will to avoid their estate being administered
under the laws of intestacy. If you have a Will but your circumstances have changed through marriage (which normally invalidates an earlier Will) or death of a spouse or other life-changing event, it is worth reviewing the content and ensuring it reflects your current wishes.

Will writing and estate planning services are not regulated by the Financial Conduct Authority

Professional advice is essential

When it comes to looking after our retirement planning and investments, vigilance and professional advice are essential. If you are wondering what to do, contact Robert Bruce Associates for individual assistance.

NOTHING IN THIS ARTICLE SHOULD BE SEEN AS GIVING INDIVIDUAL FINANCIAL ADVICE.

How good is your financial IQ?

At election time, it’s become almost a ritual to quiz politicians on the cost of every-day items such as a pint of milk. Many get it wildly wrong and they are not alone. Recent personal finance surveys have shown that we all  have a few potential blind spots when it comes to money matters.

THE COST OF RAISING A FAMILY
Research by Ipsos MORI and King’s College London shows that when asked to estimate the cost of raising a child to 21 the average guess was £50,000. The actual cost has been calculated at more than four times that amount at £229,0001. This finding is all the more surprising when you consider that the average guess among those with families was only £40,000.

THE PRICE OF A DEGREE
The same survey reported that people estimated that students today leave university with debts of £21,000 including tuition fees. However, the actual figure according to a recent study is £44,0002. When those aged 16-24 were asked, they were able to come up with a more accurate but still too low figure of £30,000.

THE AVERAGE COST OF A HOME
With rising property prices never out of the news headlines, it’s hardly surprising that in May when asked in the Ipsos MORI survey what the average cost of a house in the UK was, respondents estimated £190,000. This is very close to the Nationwide’s May 2015 house price survey figure of £195,000. Interestingly, whilst we might be on the money when it comes to house prices, a survey conducted by the Principality Building Society showed that less than half the borrowers they asked knew what rate of mortgage interest they were currently paying.

1 Centre for Economics and Business Research
2 The Institute for Fiscal Studies

Professional advice is essential

When it comes to looking after our retirement planning and investments, vigilance and professional advice are essential. If you are wondering what to do, contact Robert Bruce Associates for individual assistance.

NOTHING IN THIS ARTICLE SHOULD BE SEEN AS GIVING INDIVIDUAL FINANCIAL ADVICE.

Watch out, the scammers are out in force

Caption: How the scams workrb

Since the announcement of the pension reforms last year, the scammers have been out in force, targeting those aged over 55 in the hope of subverting their hard-earned cash into unsafe or non-existent investment schemes.

The charity Citizens Advice Bureau, which runs the government’s Pension Wise guidance service, reports a sharp rise in people being approached in connection with their pension lump sums. They report that new scams are emerging all the time.

Scammers and con artists can often sound very convincing. They may make contact by phone, e-mail or even arrive on your doorstep pretending to be qualified financial advisers. Often their trick is to say that you have been singled out to receive privileged information about a particularly sure-fire investment proposition. They may have glossy marketing materials purporting to show that you’ll receive an investment return that’s much higher than anything available to you through normal investment channels. They will also tell you that you must act quickly, and that they need you to make a decision there and then as their opportunity will be snapped up by others if you hesitate.

What they have to offer is very often dubious advice and unsafe or bogus investment opportunities. These can include schemes to put your money into wine, car parking ventures and even oil deposits. Many of them sound feasible, but on closer examination they prove to be very risky, often unregulated and frequently non-existent.
The best advice is, as always, that if a proposition sounds too good to be true, then it probably is. So it’s important to remain on guard.

Taking the advice of your authorised and regulated professional adviser on any investment proposition will protect you from becoming a victim of the scammers.

Professional advice is essential

When it comes to looking after our retirement planning and investments, vigilance and professional advice are essential. If you are wondering what to do, contact Robert Bruce Associates for individual assistance.

NOTHING IN THIS ARTICLE SHOULD BE SEEN AS GIVING INDIVIDUAL FINANCIAL ADVICE.

The new dividend tax

Caption: The new rules

Following an announcement in the Summer Budget, the taxation of dividends is set to change from April 2016.

Political issue series: tax increases concept. Photo realistic sign, isolated on pure white

Political issue series: tax increases concept. Photo realistic sign, isolated on pure white

Under the current system, dividends carry a 10% tax credit, meaning that basic rate tax payers have no further liability for income tax, while higher-rate and additional-rate taxpayers see their liability reduced to 25% and 30.56% respectively.

As a result of the changes announced, investors will have a tax-free dividend income allowance of £5,000. After this limit has been used up, any further dividends will be taxed at 7.5% for basic rate taxpayers, 32.5% for higher-rate taxpayers and 38.1% for additional-rate taxpayers. If your dividend income takes you into the next income tax band, you will pay the higher dividend rate on that portion of the dividend income.

The government says that as far as ordinary investors are concerned, those receiving modest dividend income from company shares should see no change in their tax liability; some may even find themselves paying less tax.

Non-taxpayers will see no change, and neither will basic rate tax-payers with dividend income under £5,000. Where the changes will be felt by basic-rate taxpayers is when their dividend income that’s not generated within a tax wrapper such as an ISA exceeds £5,000; under the new rules it will be taxed at 7.5%.

Other clear winners are those higher and additional rate taxpayers who receive dividend income of less than £5,000; they will receive their income with no further liability to income tax.

There are ways of reducing the amount of dividend tax payable, including:

  • Married couples can look at equalising their portfolios so that they each make full use of each spouse’s £5,000 allowance
  • Using tax-efficient savings vehicles. Make the most of your annual ISA limit

(£15,240 for tax year 2015-16) and get the benefit of tax-free dividends and no capital gains tax.

  • Think about topping up your pension. Self-invested personal pensions benefit

from tax-free dividends.

We will be able to give you more advice based on your personal circumstances.

Professional advice is essential

When it comes to looking after our retirement planning and investments, vigilance and professional advice are essential. If you are wondering what to do, contact Robert Bruce Associates for individual assistance.

NOTHING IN THIS ARTICLE SHOULD BE SEEN AS GIVING INDIVIDUAL FINANCIAL ADVICE.

Cash lump-sums seem to be the initial withdrawal favourite

Caption: Many options are available howeverRBAAA

Some interesting data has emerged from the Association of British Insurers (ABI),who have disclosed that over £1.3bn has been withdrawn from pension funds in the form of cash lump-sums, with the average amount being £15,000. At the same time an additional £1.1bn has been withdrawn from these funds in the form of drawdown payments. These payments have averaged an amount of £4,200.

Obviously, the route of cash lump-sum payments has proved anextremely popular route in accessing pension funds, however, many industry commentators believe that this trend will slow, as the average pension fund amount grows.

It appears that this route has been favoured by those with total pension pots in £30K-£40K range, whilst less popular with holders of larger sized pension pots.

Having said that, it is believed that members of defined benefit (DF) pension schemes – who may be investigating routes to access their previously locked-in retirement funds – may well consider this cash lump-sum option. At the same time these DF pension holders are also looking at ways of fully, or partially, transferring their pension value to other pension products.

Other statistics have revealed that 45% of current annuity customers have changed their provider, whilst 55% of people currently enjoying income drawdown have, likewise, changed their provider.

The landscape is still muddy, as at present 59% of pension funds have said they will not offer drawdown to members, whilst 27% said they would, if such payments were arranged through a broker or provider.

Clearly, given the complexity of the recent pension fund reforms, it is essential that you take professional financial advice as to the various options available to you, as a pension fund holder or for those approaching retirement.

We are happy to discuss these issues with you in greater detail, so please do not hesitate to contact us for our suggestions.

Professional advice is essential

When it comes to looking after our retirement planning and investments, vigilance and professional advice are essential. If you are wondering what to do, contact Robert Bruce Associates for individual assistance.

NOTHING IN THIS ARTICLE SHOULD BE SEEN AS GIVING INDIVIDUAL FINANCIAL ADVICE.

Could the bank of England actually cut interest rates?

In an interesting disclosure, the Chief Economist of the Bank of England (BoE), AnRB Blog.jpgdy Haldane, has stated that because the inflation rate in the UK may not pick up in the third and fourth quarters of 2015, towards their target level of 2% and the threat to the global economy from sluggish emerging economies, such as China, it may be viable to actually cut interest rates from their current historical low of 0.5%.

Given that interest rates have been set at 0.5% for over six years now, it was thought by most observers that any future movement in the rate would be up, not down. Mr Haldane’s argument is centred around the facts that the recent Markit Purchasing Managers’ Indexes (PMI) have softened in both the UK’s construction and manufacturing sectors, indicating a possible slow down across the second half of the year and that problems in Greece and the emerging markets, such as China, could be a drag on UK growth moving forward.

He was saying that these problems were: “the last leg of what might be called a three-part trilogy. “The balance of risks to UK growth, and to UK inflation at the two-year horizon, is skewed squarely and significantly to the downside.” To reinforce his opinion, he went on to add that the case for raising rates was: “some way away from being made.

“Were the downside risks I have discussed to materialise, there could be a need to loosen rather than tighten the monetary reins as a next step to support UK growth and return inflation to target.” However, Mr Haldane’s theories were strongly challenged by a former member of the BoE’s Monetary Policy Committee, Andrew Sentance, as in response he Tweeted: “Sorry to say but Andy Haldane’s spouting rubbish here.”