Adele Jones, Elements

Ensure that you are making your income and capital work for you.  Women may be looking for something different to a male partner.  They often place a different value on building up capital for the future and there objectives for savings and investments will alter as their life changes.   

Consider your own risk profile and your personal goals over the short and medium term, before setting up any long term or high risk plans that may not be suitable.  Question the jargon – if it does not make sense to you, the advice is probably inappropriate.

Make the most of your individual allowances – if you do not use them, you could lose them.  Continue to build assets in your own name – so if your relationship ends, what’s yours is more easily identifiable, rather than trying to separate joint assets.  Ensure that you have built up other investments to cover the potential loss in retirement income from pensions.  Assets held in your sole name are also important for inheritance tax planning.

Pensions and Divorce

Close to 200,000 UK marriages end in divorce each year.  The husband’s pension may often be the second largest asset after the martial home.  The pensions benefits from this can be shared, but this may prove difficult and costly.

For many women doctors, particularly those in their 50’s, it is essential that they have other sufficient assets at this stage and are not too reliant upon a husband’s retirement planning. 

This is a very complicated area but one where you must seek expert independent financial advice.

Civil Partnership Act – know your rights

Same sex partners can now have equality with married male and female couples in areas such as pensions, intestacy and taxation.  There have been major breakthroughs in the battle for equality and there is now a register that allows same sex couples legal recognition of their partnership which gives them rights and benefits which most people take for granted.

Use your tax allowances

I find women often unaware of the allowances that they may be able to claim in order to reduce their potential tax burden. 

Everybody has a Capital Gains Tax allowance which enables them to make gains of up to £8,500 a year annum before paying any capital gains tax.  This is important when you come to consider capital investments. 

Many people use investment bonds as a first port of call when investing capital but via the effective use of your Capital Gains Tax allowance, an investment vehicle such as a unit trust can be more tax efficient than a bond.

Check you are using your annual Inheritance Tax regular gift allowance.  This is ideal if you have children or grandchildren - you can make regular gifts of up to £3,000 a year in total in order to help reduce the size of your taxable estate.  You are also able to make gifts to your children in the event of marriage together with various other allowances.

Flexible Investments

When saving to build up capital for yourself have you considered what would happen if you needed access to this money ahead of time?  You may want to take a career break or start a family which would require access to your capital.  Would any penalties be payable for cashing in your savings plan or would a tax charge be triggered?

It is therefore important to consider the use of flexible savings vehicles where money can be accessed quickly and easily with no encashment penalties and any tax payable can minimised. 

Wills and IHT

Many women need to get their Will up to date in order to reflect their circumstances.   If you are a married female doctor and you and your husband have assets which amount to more than the current Inheritance Tax nil rate band of £275,000, consider seeking the advice of an appropriate lawyer.  By rearranging your wills you would be able to mitigate two amounts of £275,000, by utilising discretionary trusts within the wills, rather than simple reciprocal wills.

The exercise may involve “severing the tenancy” of the matrimonial home to ensure that assets are equalised and that upon a partner’s death, there are sufficient assets which will form the nil rate band in the tax year of death.

If you are single, you need to make a will to ensure your assets are passed to your intended beneficiaries.  If your estate is over the nil rate band, there are various ways to look at tax mitigation.  It may also be worthwhile ensuring that you have an enduring power of attorney in place.

Critical Illness

It is worth ensuring that you have adequate critical illness insurance protection, as diagnosis of a condition that stops you working, or means you have to cut back on your hours, could obviously lead to a major upheaval in your life. 

 There are various types of critical illness cover, so ensure that you understand the conditions covered by your chosen plan and the term of the policy. 

Of the sexes, women historically tend, to be worse off financially, with many taking career breaks to raise a family, therefore accruing a smaller pension and savings.  

Ensure that you have an adequate sum assured which would enable you to maintain your lifestyle requirements in the event of you contracting a critical illness.

Income Protection

Think about your age now, how long you have to retirement, and the amount of outstanding annual income you would be likely to receive between now and then.  If your financial commitments are likely to increase through, say, school fees or a larger mortgage etc… you must ensure that you cover the maximum amount of your potential income, otherwise, your ability to continue to afford this expenditure will stop in the event of long term incapacity.   

Can I have a Self Invested Personal Pension – SIPP

More female doctors are asking questions about their own retirement plans and with the changes to NHS pensions in 2012 you may wish to consider additional provision through a SIPP.  A SIPP will add diversification and flexibility to your planning. 

Do not fall into the trap of thinking that the SIPP can be used for residential property purchases and also bear in mind restrictions in funding as contributions to the NHS scheme still need to be accounted for. 

A SIPP could be ideal to save tax on any private income you may have.

Flexible Planning

Many lady doctors juggle full time work and child care.  Some prefer part-time work whilst some prefer no on calls.  Which ever route you take, it is important that your financial planning is flexible enough to cope with varying income streams and that your protection policies can be adapted to suit your changing needs.