Cleaning up mother-in-law's retirement finances

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giddings

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I’m trying to help my 76yo mother-in-law get her messy finances in order. Big thanks in advance for any advice.

She was badly burned by overexposure to Irish banking shares a decade ago, and is understandably nervous about making the right decisions.

Long story short: she has a handful of investments, some quite ill-advised, worth about €850k. I’m guessing these should be consolidated into an ARF, or a similar type of retirement vehicle. I’m wondering:
  • Is this the right approach?
  • What considerations should she keep in mind?
  • How should she go about it? Especially keen to minimise tax liability along the way
She also owns her home, with no mortgage, and has sufficient day to day income, from the state pension and from renting a flat attached to the house.

The investments include €150k in two (very poorly) managed funds with one of the big firms; €325k in a dozen shareholdings in UK and Irish bluechips; €300k in State Savings Certificates and Bonds; and €90k in a fixed deposit account.

At her age I think it’s crazy to hold on to these. I just don’t want to screw up while selling them and moving the proceeds, and find out that she’s hit with avoidable CGT or other costs.

Any suggestions appreciated.
 
giddings said:
Any suggestions appreciated
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My suggestion: no matter how good your intentions, stay away from it if you don't know what you're doing.

You're talking about moving what I understand are after tax investment funds into a pension wrapper, for a 76 year old?!

You haven't given any details about the tax situation with any of the investments, her overall tax position, or whether she has capital losses carried forward to be utilised. Whether the investment funds can be moved to different funds without penalties, etc etc etc.

And you haven't actually said what's wrong with what she's currently doing?
 
giddings said:
She also owns her home, with no mortgage, and has sufficient day to day income, from the state pension and from renting a flat attached to the house.
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She has her own house, a comfortable income, and enough wealth to draw down for pretty much any eventuality.

I would just leave her alone.
 
Agree she should get paid for financial advice. But here are some pointers:

1) The ARF is a non-runner - the attraction of pensions is that you get tax relief on the contributions from your earnings. As she has no pensionable earnings, it does not apply to her.
2) She is likely to be very wealthy when she dies. Death is the best CGT avoidance plan there is. When she dies, her taxable capital gains die with her.
3) For that reason an older person who will not need the money should invest in products subject to CGT.
4) In her particular case, you need to establish her CGT position. Do her losses on the bank shares exceed the gains elsewhere?
5) Not sure what sort of a fund the €150k is but if it's a unit-linked fund it is very tax inefficient for an older person and should be cashed in.
6) She should move to 100% investment in equities. And while it's not right to time the market, the current valuations look excessive.
7) She might consider gifting some money now if any of her children or grandchildren need it. However, that is a tricky one.

Brendan
 
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She's 76 and has €850k in investments, her own home, state pension and rental income
All sounds good to me, you even say "has sufficient day to day income" so why the need for change and to stick it all in a ARF ??
Is this more about inheritance planning or improving your MILs lifestyle ??
 
giddings said:
I’m trying to help my 76yo mother-in-law get her messy finances in order. Big thanks in advance for any advice.

She was badly burned by overexposure to Irish banking shares a decade ago, and is understandably nervous about making the right decisions.

Long story short: she has a handful of investments, some quite ill-advised, worth about €850k. I’m guessing these should be consolidated into an ARF, or a similar type of retirement vehicle. I’m wondering:
  • Is this the right approach?
  • What considerations should she keep in mind?
  • How should she go about it? Especially keen to minimise tax liability along the way
She also owns her home, with no mortgage, and has sufficient day to day income, from the state pension and from renting a flat attached to the house.

The investments include €150k in two (very poorly) managed funds with one of the big firms; €325k in a dozen shareholdings in UK and Irish bluechips; €300k in State Savings Certificates and Bonds; and €90k in a fixed deposit account.

At her age I think it’s crazy to hold on to these. I just don’t want to screw up while selling them and moving the proceeds, and find out that she’s hit with avoidable CGT or other costs.

Any suggestions appreciated.
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Might be a better idea to make sure she has a will made :)
 
You guys are the best ;)

That's a very clear and sensible steer to leave this in expert hands, and possibly leave it all alone completely.

For context, I was aiming to correct for excessive concentration in two areas. That €150k is in two Aviva funds that have barely held their value over five years, when she would have seen healthy returns from a vanilla market strategy. The vast majority of that is in an Irish property fund. And among the individual shareholdings, €260k is in two companies (Diageo and CRH). This also seems risky.

I'll seek no-commission / paid advice for her on it. Big thanks to all who took the trouble to reply. And any additional suggestions welcome
 
giddings said:
That €150k is in two Aviva funds that have barely held their value over five years, when she would have seen healthy returns from a vanilla market strategy. The vast majority of that is in an Irish property fund. And among the individual shareholdings, €260k is in two companies (Diageo and CRH). This also seems way too concentrated, possibly risky.
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I agree that this is a big concentration risk.

This is more of a personal question than a financial one.

Every family has its own dynamics and there are presumably other siblings. I guess you have to balance long term the gain in likely investment performance against being seen to be interfering.

I've known a few families where the best of intentions get misunderstood.
 
NoRegretsCoyote said:
I agree that this is a big concentration risk.

This is more of a personal question than a financial one.

Every family has its own dynamics and there are presumably other siblings. I guess you have to balance long term the gain in likely investment performance against being seen to be interfering.

I've known a few families where the best of intentions get misunderstood.
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You're dead right. Independent advice has the added benefit of fending off the siblings' perception that I'm meddling in her affairs.
 
And @Allpartied -- good to hear your perspective. It's not my money so no offence taken ;)

Even if the figures were much smaller, the principles should be similar and someone else might learn from the discussion. I've contributed and tried to help others on other AAM forums. I'll update this thread with whatever independent advice we get.
 
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giddings said:
And @Allpartied -- good to hear your perspective. It's not my money so no offence taken ;)

Even if the figures were much smaller, the principles should be similar and someone else might learn from the discussion. I've contributed and tried to help others on other AAM forums. I'll update this thread with whatever independent advice we get
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I was only joshing, but it may have come across as offensive. So sorry and best of luck.
 
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