The following Family Investment Company case study illustrates the utilisation of this structure with a view to increasing investment
potential alongside ring-fencing and protecting family legacy. Ring fence assets via the FIC case study.
Overview
Robert is a racehorse and jockey trainer, living abroad, with a few years until retirement. He has two sons and three granddaughters, some existing investment property, and a background in purchasing and updating UK property. The pandemic changed Robert’s personal working situation, causing him to rethink his route to his desired retirement. He needed to plan for his future as well as grow a protected legacy for his family.
Due to the rising cost of living in the UK and the desire to take semi-retirement in a beautiful place, Robert currently lives in Thailand. He continues to work with jockeys and horses, but enjoys a more peaceful lifestyle which he wishes to continue, by way of ensuring his investments achieve the gains he requires.
This FIC case study illustrates how the Family Investment Company structure suited Robert’s needs, and how he worked with TLPI to set one up.
The Situation and Goals
Robert began his journey with the aim of achieving higher returns on his savings and increasing the gains on his investments. He also wished to ensure that his wealth would be safeguarded as a legacy for his family, without an extensive Inheritance Tax burden for them in the years to come. Upon reaching his sixties, his pain points were:
- Do I have enough in the retirement pot to achieve the retirement I desire?
- My current savings and investments are not achieving the returns I feel I could be getting
- I want to protect my family wealth for my sons and granddaughters
Initially, Robert conducted his own research into possible solutions for utilising and increasing his pensions. As his previous experiences involved property investment in the UK, he was aware of the enviable returns achievable via property, but felt he was not experienced enough in the legalities and tax implications to increase investments without support. Google searches
and YouTube videos relating to property highlighted various plans, structures and avenues but didn’t offer the depth of knowledge and the support Robert was looking for.
Robert explained that, had he been a younger man, increasing UK property investment, refurbishing and flipping may have been a consideration. “However, as you reach your sixties, you are less inclined to take risks.” As such, a more hands-off solution with more attractive gains had to be the goal.
Initially, Robert had several conversations with various companies that might offer what he was looking for. One particular company offered an in-depth zoom consultation to look at the situation, for a fee of £200+. This did help, highlighting various options for investing, but most strategies discussed did not offer the inheritance advantages Robert needed to achieve. This is when he learned about the Family Investment Company. It seemed to provide a flexible structure for Robert’s investments and long-term strategy, as well as ensuring his funds were protected for his sons. The fee quoted for setting up the Family Investment Company was large due to the involvement of barristers and legal professionals, but at around £20,000, it also seemed more than was required for Robert’s situation.
“I had heard of the Family Investment Company but could find no information or support out there for setting one up, other than through the barristers I had been talking to. At £20k for setup, it was expensive, but I was veering towards paying that as my only option. Just before the final decision I decided to put out feelers, just to ensure another option with my limited pension funds wasn’t an option, and that’s when I found TLPI. Not only could TLPI provide the Family Investment Company set-up and support, but my consultant was informative in helping me understand all of my investment options.”
Robert’s initial consultation with TLPI started with questions related to using his pension funds to achieve his goals. However, straight away on a call with our consultant, it was clear from both sides that the Family Investment Company was what Robert was describing and what best suited his personal situation.
The set-up of Robert’s Family Investment Company was straight-forward and quick. The service from TLPI meant that Robert could create the structure and make investments in his own time. This allows the peace of mind that comes with due diligence and not rushing as he chooses his investments. So far, Robert has opted for hands-free investment in third party loans with property development companies.
“Living abroad and unable to commit extensive time to managing my property investments, this is the perfect solution for me. It offers enviable higher returns than I would have had on my savings pot otherwise, but is also suitable for my level of knowledge, attitude to risk and requirement for something that will not impact my time too extensively.”
The Approach
The first step for all clients that approach TLPI is a free consultation to understand their individual situation, what they are trying to achieve and how we can remove the pain points taking up their time, energy, and resources.
For Robert, he had learned that a tax-efficient investment company vehicle would be the best route to achieve his goals, but finding information online had been difficult. Having some property experience, he was already decided that property investment would be the most profitable solution, but the why, where, and how needed clarifying. The Family Investment Company offered everything that Robert required.
Working with our clients, we aim to:
- Understand their personal situation
- Apply expertise and knowledge of over one thousand tax benefits and subsidies available to company directors
- Provide the knowledge and understanding needed to make informed decisions about ALL their wealth assets and options
- Apply 360° strategies to mitigate tax liability
- Achieve the control and flexibility required to leverage current wealth to grow the business and assets
- Free up time, by consolidating the many areas of the business and personal
financial situation into one strategy for optimising tax and growth
Who?
Having searched the internet for information, it was clear that reliable and understandable information about the Family Investment Company was hard to find and more bespoke support was required. Robert inadvertently found TLPI via a pension-related search – he immediately felt rapport with his consultant and was able to find answers to all his questions. In addition, he was given the space to understand the product as a platform to make investments that he chose,
in his own time.
Each of our clients is afforded their own experienced consultant, who will advise upon investment strategy and structures, suited to the individual situation of the client.
“Investing in other people is new to me. Some of the terminology and how it worked was confusing, but TLPI were able to clarify any confusion and answer any questions I had about the options that would be available to me using the Family Investment Company.”
Why?
Robert’s Family Investment Company allows Robert to invest in property with his savings, having ascertained that his current level of pension was not the most suitable source of funds for his property investment goals. The company vehicle is more tax efficient than if Robert had made the purchases personally and also offers security for his family which was a key factor in Robert’s strategy.
How?
Whilst buying investment property personally is liable for income tax as part of the estate, the Family Investment Company allows Robert to retain total control, whilst holding property within a tax-efficient wrapper for the protection of his family.
Setting up a Family Investment Company means your children become beneficiaries and company assets are not liable for Inheritance Tax.
The flexibility of the Family Investment Company means that Robert has full control over the company and its assets. He is able to move funds in and out of the scheme. More importantly, TLPI have helped him correctly structure the product so that shares are protected for his sons and granddaughters, should the worst happen.
The Result
Robert has started by making investments via loan notes. This is hands-off property investment, giving him more peace of mind and requires less legal knowledge or time commitment. Robert knows that his money is making far more than it would be sat in stocks and shares accounts. He plans to invest more of his funds once he decides upon other loan notes or property-related asset classes. TLPI’s setup means that Robert has the continuing reassurance of his consultant at the end of the phone, should he require advice regarding his strategy. By securing his future, Robert has been able to follow his desire to escape the rising costs of living in the UK. He has an idyllic lifestyle in Thailand but is still able to grow his investment portfolio to the advantage of his whole family, for the future.
Summary
For most of our clients, knowledge is key. You don’t know what you don’t know, and so for many, they simply do not know the advantages that can be gained by implementing The Family Investment Company, for Robert, he was able to ring fence assets via the FIC, and protect his legacy.
We asked Robert what his advice to others, looking to optimise their own saving, pensions and ring fence assets would be.
“If I was advising anyone, I would say just watch and read as much as you can. The internet, property channel and YouTube are a great source of information, especially if you are looking to invest in the buy-to-let market. These people will tell you what mistakes they made and guide you through those. Educate yourself about what is involved. Whilst there is a lot of rubbish, if you’re discerning you can sort the weak from the reputable.”
“I was nearly biting the bullet and paying £20k odd but TLPI have set up my Family Investment Company for a fraction of the cost. Sometimes looking on the gov.uk website is too difficult to get specific answers, but TLPI could answer all of my questions straight away.”
At TLPI our consultants are experienced in property, investment strategy and pensions. We are registered with HMRC to set up Family Investment Companies and SSAS pensions. We would like to thank Robert for sharing his story. Our aim with FIC case studies is to provide learning content that illustrates how the Family Investment Company works as well as other powerful tax planning vehicles and strategies that can be used in conjunction with the Family Investment Company along with allowing you to ring fence assets. Our aim is always to understand your personal situation and provide advice and support that fits around your aims and goals.
