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Bloomsbury discusses the analysis and various observations and conclusions with Sean and Claudia to identify how they feel about the available options.

After discussing the pros and cons of the various planning options, and considering the overall position, Sean, Claudia and their planner formulate the overall financial plan incorporating the following points:

• Sean and Claudia should each create enduring powers of attorney, to allow each of them to deal with the other’s affairs in the event of incapacity;
• Sean and Claudia should draw up wills to avoid intestacy and ensure that their assets would be distributed in accordance with their wishes in the event of the demise of either of them;
• They should also establish a separate Portuguese will (which refers to the UK will) to deal with the property in Portugal.
• They should transfer all their existing shares and the various collective funds to a nominee service provided by Bloomsbury’s third party specialists. The funds will be allocated to a portfolio containing 70% risky assets, using passive low-cost institutional type pure asset class and index funds, as this would allow them to tailor their portfolio risk exposure to their personal risk tolerance in the most cost-effective manner.
• They should add £0.75m of their cash to their long-term investment portfolio, so as to make effective use of their assets by exposing them to the higher return potential associated with the capital markets. In any case the cash position will increase by £1.2m once Sean receives his signing on bonus from his new employer next month.
• Sean and Claudia should consolidate their various pension plans, including Sean’s employer-funded personal pension once he leaves employment next month, to a low-cost self-invested personal pension (SIPP). As well as simplifying their affairs, the funds could be transferred to the new nominee service recommended for non-pension assets and be managed by Bloomsbury using the same asset allocation and index fund strategy.
• Sean should negotiate for his new employer to pay £0.4m of his bonus into his SIPP. The employer will avoid employer’s national insurance contributions equal to £51,200 on the pension payment and they should be prepared to pay this saving into Sean’s SIPP as an additional employer contribution, which would be cost-neutral for the employer.
• Claudia should negotiate for her employer to pay £100,000 into her SIPP by bonus and salary sacrifice. The employer will avoid employer’s national insurance contributions equal to £12,800 on the pension payment and they too should be prepared to pay this saving into Claudia’s SIPP as an employer contribution.
• The new contributions, combined with the existing plans and even assuming an annualised growth rate of 8% net of costs, should allow Sean and Claudia to remain comfortably within the new pension lifetime allowance (assuming the limit is £1.8m from 2010/11 and rises at 2.5% thereafter). In any case, if investment growth and further contributions cause either of their funds to get near to the then limit it would be possible to switch the investment strategy to index-linked gilts and thus remain within the limit.
• Claudia should hold certain long term assets in a nominee service based in Jersey. This should be funded from the shares in previous employers and the cash held offshore which originated outside the UK. The capital will be managed as part of the long term portfolio but will avoid UK capital gains tax arising from future rebalancing of the portfolio assets.