If you have two people who want to retire on similar dates and have similar birthdays you could add their income and assets together (although you will have to manually account for the extra tax allowances they will have).
Consider the scenario of Tom, living with partners Jude and Becky, all age 40. Tom, a higher-rate taxpayer, earns substantially more than Jude and Becky who pay basic-rate tax.
In the event of Tom's death, Jude and Becky would like to stay together. Jude and Becky, manage the household due to Tom's demanding job. They all anticipate being together through retirement. Tom's retirement may come later because he enjoys work.
To plan their retirement, we need to discuss plans and use a cash flow model to make sure that they have enough savings, nothing new there.
Tom’s financial circumstances can be considered separately if we calculate the income he needs to bring into the household. He pays 50 per cent of the household expenditure now, so let’s assume that continues.
Jude and Becky can have their own separate model so simplify your calculations.
Protect Tom’s income the same as in any other client, by looking at the household income need and what other income is available if he cannot work. For life insurance, split the benefit between Jude and Becky using a trust form.
In conclusion, financial planning in polyamorous relationships is no different to planning for everyone else, because it is about acknowledging individual needs and providing tailored solutions.
The only difference is that you might need your thinking cap.
But, adapting to these changes and welcoming diverse clients creates new opportunities while ensuring everyone's financial wellbeing is properly cared for.
Jamie Lowe is a financial planner at True Self Wealth
