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Tax Planning

Low-risk inheritance planning

Wednesday, January 05, 2022

Low-risk inheritance planning
Our capabilities in action

Mr. Tao was left an inheritance from his late parent’s estate and wanted to look at his investment options. A businessman who always puts his family first, Mr. Tao was adamant that the inheritance capital be put away for the benefit of his children.

To that end, Mr. Tao was cautious about volatile or risky investments. He wanted a sense of security that his children would be safe and cared for.

He liked the idea of borrowing (using leverage) to allow for greater returns, however, was concerned about the liability he was creating by borrowing through his private bank. He was aware that their terms of borrowing required collateral, and he was not willing to put his business at risk.

Through understanding Mr. Tao’s business and personal goals, the perfect solution for him was to invest the capital with a company that holds a solid track record of managing client’s money; along with a good and stable credit rating that represented the organization’s strength.

Doing so offered Mr. Tao’s family protection in the form of life assurance; allowing him to invest in a strategy that suits his risk profile; and importantly gives the option to leverage, should he wish to use it.

As Mr. Tao did wish to leverage the investment, our finance partners arranged less onerous terms compared to those from his private bank. He only needed to service the cost of borrowing whilst the investment is running – something that was affordable for him using his current cashflow.

Since Mr. Tao is investing for the sake of his children – and is also comfortable giving investment decisions and strategy to others – he is offered the comfort of time.

Understanding how much Mr. Tao values dependability, he was supported as he put thought into financial contingency plans to be enacted in the case of his premature death.

It was decided that the initial borrowing will be repaid to the finance partner first, with the balance of the proceeds distributed to the children. For added protection, the investment was also organized to be held under a trust structure.

It was important for Mr. Tao that his family’s well-being be put first and, by empathizing with that wish, favourable investment options were created.

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