The period following Abigail’s divorce was a difficult one for the family, with Abigail’s work demands restricting the amount of time she could spend with her young children; although Abigail is a high earner the divorce left her with little capital and a relatively large mortgage of £150,000.
Having built a successful business, John and Mary retired in their late 40s, their income being provided from private pension plans and capital achieved on the sale of their business. Our regular financial modelling of their situation indicated that their capital position would improve over the years ahead and, indeed, had improved significantly since their retirement.
John and Mary asked us to model a scenario where they would make gifts of £150,000 to Abigail and Jane, their reason being that they would like to treat both girls equally, even though the problem they were attempting to solve was Abigail’s. They felt that if the burden of the mortgage was lifted from Abigail she would be able to take a less “high-powered” job and devote more of her time to her children. We modelled a number of scenarios for John and Mary, showing the effects of the gifts at various levels right up to the £300,000 ideal scenario; having demonstrated to them that such a gift would not affect their lifestyle, they decided to go ahead.