A Long-Term Financial Plan, including Sustainable Investing

Background

Ultan and Margaret are long-term existing clients of Everlake. They are both in their forties and are married. They live in rural Ireland with their two financially dependent children and are farmers by profession.

Since we’ve known them, the couple’s priorities have always been their children and sustainability. They farm in a sustainable manner, and highly value the natural environment.

Ultan and Margaret came to us in 2007 with €250,000 to invest and were focussed on sustainable investing from the start. They have sufficient emergency funds and savings to continue to regular add to their investments each year. Over the last 15 years, their funds have grown significantly.

Client Objectives

During our regular review with Ultan and Margaret, we discussed long term financial planning, and several concerns and opportunities were identified.

Margaret is younger than Ultan and doesn’t have her own pension. As the farm was inherited by Ultan from his family, Margaret does not receive any income in her own name. 

Margaret is very conscious that she has no pension and as they plan to pass the land to her children, it’s unlikely that she will have any funds from selling the farm.

As their youngest child was about to turn 13, Margaret would no longer qualify for PRSI credits as a homemaker. The status quo would mean that she would receive no state pension in retirement as she will have insufficient credits paid.

The couple wanted to look at possible income options for Margaret and to explore the options of starting a pension fund for her.

Ultan has capital losses from a previous investment he made in the early 2000s. The investment was in a company that was subsequently liquidated.

They live a modest lifestyle and want income for themselves. They wish to give an inheritance to their children but to also balance this with sufficiently providing for themselves in retirement.

They are very keen to remain sustainable investors and wanted their values to be considered for any proposed investment portfolios.

The Everlake Approach

We advised Margaret and Ultan to take some financial steps and restructure their portfolio to achieve a few key goals.

• Generate a PRSI stamp for Margaret each year to enable her to receive a full state pension
• Utilise Ultan’s capital loss against future gains in the portfolio to avoid overpaying tax
• Ensure their portfolio is not liable for an exit tax disposal every 8 years
• Provide an income for Margaret from dividends with no income tax payable
• Assets remain sustainably invested as per their values 

The Outcome

Ultan and Margaret are invested in a tax-efficient sustainable portfolio. The portfolio aligns with the criteria and goals of the Paris Agreement which aims to reduce carbon emissions, limit the rise in global temperature, help poorer nations and reduce greenhouse gasses. The portfolio also excludes armament manufacturing and is designed to assist companies with improving their sustainability scores each year.

The couple’s new long-term financial plan generates an income for Margaret and ensures maximum tax efficiency.

The plan gives them security in retirement, with assets ringfenced for them when they choose to stop working.  It also frees up the farm to be passed to children without having to be sold, proving an inheritance for them, and keeping the land in the family.

For more information read our Sustainable Investing guide Read Here