R06 April 2023

Hoolahan

Hello,

Just wondered if anyone is studying for R06 this month, the case studies are out. Wondered how you might be getting on.

I had a few thoughts, Nick and Shirin have set up a Discretionary Trust in their will for their children to inherit at 18, however I am not sure this is the most tax efficient solution as you potentially lose the RNRB unless trustees make an absolute gift within 2 years of death? Might as well just use a bare trust from the outset?

For Ken and Mary, it looks like Mary has not got a full state pension having been contracted out in her old NHS pension. With her state pension already in payment, is she still able to pay NIC3 to top it up, looks she might have until July 31st 2023?

Thanks

SimplyParaplanner

You are correct about the Discretionary Trust however N&S are no where near having a IHT issue with assets inside the estate of around £250K so is this a concern at this stage, or more something to consider as part of annual reviews going forward, keep the will up to date and they can change their wills in the future when kids become adults.

On the additional years point, this was raised in the BTS forum and one of the trainers confirmed this would be option.

BryceClark22

@SimplyParaplanner said:
You are correct about the Discretionary Trust however N&S are no where near having a IHT issue with assets inside the estate of around £250K so is this a concern at this stage, or more something to consider as part of annual reviews going forward, keep the will up to date and they can change their wills in the future when kids become adults.

On the additional years point, this was raised in the BTS forum and one of the trainers confirmed this would be option.

I would echo the above, I would be very surprised if we get any questions regarding IHT for nick & Shirin.

For me Im focussing on:

• Paying off mortgage early or not
• Maximising pension
• Getting the right protection in place

Also not sure re the insufficient NI contributions, for them I would say regarding state pension it is a question of should they defer state pension, if so who? (as they can defer state pension once even when in receipt)

Hoolahan

@BryceClark22 said:

@SimplyParaplanner said:
You are correct about the Discretionary Trust however N&S are no where near having a IHT issue with assets inside the estate of around £250K so is this a concern at this stage, or more something to consider as part of annual reviews going forward, keep the will up to date and they can change their wills in the future when kids become adults.

On the additional years point, this was raised in the BTS forum and one of the trainers confirmed this would be option.

I would echo the above, I would be very surprised if we get any questions regarding IHT for nick & Shirin.

For me Im focussing on:

• Paying off mortgage early or not
• Maximising pension
• Getting the right protection in place

Also not sure re the insufficient NI contributions, for them I would say regarding state pension it is a question of should they defer state pension, if so who? (as they can defer state pension once even when in receipt)

Mary can potentially top up any gaps between 2006 and 2015 until July 31st 2023 (credit to Luiza at BTS for confirming). So could be worth a couple marks if a suitable 'how they can boost their retirement income" pops up.

Ken could pause his SP once, seems worth considering while he's earning again, securing more guaranteed and indexed income could be a real benefit.

In terms of Nick and Shirin paying off mortgage early, I am also preparing for a "what other options they have" sort of question too, interest only/PCLS perhaps. Though I feel their current arrangement is probably best.

I wonder as well if we may get a "should Ken continue with his FAD in retirement" to which I think yes given his ATR and their other sources of guaranteed income.

Anyone who wants to chat more and bounce ideas, let me know.