The Life of Brian Riley, Phase 3

Review of previous planning

• Was State Schooling investigated?

• Were any grants or scholarships available?

• Could Mavis continue working and producing sufficient income?

• Any problems in administering Arthur's will?

• Did the portfolio produced from the capital left by Arthur meet her objectives?

• How accurate were the income/expenditure forecasts?

• What was the impact of emotion on decision making?

• Taking account of the emotions, should the move to a smaller house have been anticipated and could any similar decisions have been made earlier?

• Brian and Susan attend local State School.

• Mortgage is repaid in full.

• Mavis has an income of £30,000 (made up of £10,000 pension and £20,000 self-employed earnings).

• £40,000 lump sum received from Scheme Trustees; it can be assumed that some balance of the inherited £111,000 is left.

• Veronica has started a life independent of Mavis in USA.

• Susan wishes to leave school as soon as possible, earn her own living and leave home.

• Brian is studying for an Engineering Degree, with loans of £2,000 p.a. and a small allowance from Mavis.

• Brian also has part-time and holiday jobs.

• Mavis' in-laws no longer want to subsidise the family.

What Mavis should now do

Income and Expenditure

• Review self-employed income and ensure all allowances are being claimed.

• Can the invested capital be used to increase income as there is no longer any support from George and Mildred.

• Will Susan be making any contribution to the family budget after leaving school but before actually leaving home.

• Future income in the guise of pension from her own income needs to be planned, particularly if she is finding it difficult to manage on current levels.

• Will Susan expect some support after leaving home, or help in buying a property.

Capital

• The current risk profile of the portfolio should be reviewed in respect of the change in circumstances.

• As there is now a need to be more self-reliant the accessibility of the funds should also be reviewed.

• Some of the £4,000 'refund' could be passed to Brian as a Potentially Exempt Transfer (PET) or put into a Trust arrangement with the income being available to subsidise his income.

• Mavis' capital position plus the value of the house (assuming that inflation has increased the market price) indicates that a probable future IHT bill exists and therefore it could be an appropriate time to review life assurance and wills.

Immediate Action

• He should investigate local banks and/or building societies to ensure he gets the best deal suitable for his particular circumstances; free overdrafts, discount deals, insurance deals, special loan availability etc.

• As he has his own tax allowance (and has done since birth) he should keep a close watch on the levels of income. Once he becomes a tax-payer he might wish to consider a Cash ISA as a home for his capital in order to take advantage of the higher rates.

• The part-time and holiday jobs may incur tax-deductible expenses and records should be kept to mitigate any possible tax bill. Similarly if he is being paid with an automatic basic-rate tax deduction the records could help him obtain a tax rebate at the end of the year.

Future Action

• Investigate the employment situation in his chosen area of study.

• As he wants to set up his own business later on he could also start to research the availability of grants from Government Bodies, Local Governments, and the EU.

• If income is reasonably high, he might consider making single contributions into a stakeholder pension.

REMEMBER You should not use any information contained on this page as the basis of any action until you have discussed matters with your financial adviser.