Strategic financial planning may be defined as a continuing process, based on short and long-term future planning of a client's financial affairs.

It involves advice on tax planning (through wills and settlements), life assurance, pensions and investment products.A plan should be developed for your client to meet his or her immediate needs at each stage of life.

This should cover the time when he or she is single, on marriage, parenthood, on divorce and throughout life to meet differing financial needs and circumstances.The adviser must comprehend a client's needs and aspirations.

The latter will, in particular, dictate the best pension advice.

If the client intends to remain an employee, for example, it may well be that an occupational pension topped up with additional voluntary contributions (AVCS) or free-standing voluntary contributions (FSAVCS) is appropriate.

If the client, however, envisages working for him or herself or in partnership, a personal pension may be preferred because of, for example, the ease of transferability.There has been a tendency in the past for solicitors, when a client consults them to make a will, to do just that.

This is an unfortunate reaction.

The will is an important legal weapon which may be used to organise the client's affairs in the most tax efficient manner, to comply with the client's wishes as to the devolution of their property and yet be seen as part of an overall package to plan financial affairs.An elderly client who calls in to make a will should be advised of the benefits of an enduring power of attorney.

The advice should not stop there.

To prepare a will, a lawyer must take full instructions as to the client's financial and personal circumstances.

This means the solicitor is in a unique position to suggest a comprehensive strategic financial plan for his or her client, subject to regular reviews necessitated by changes in the client's circumstances, whether personal or financial.Solicitors are generally authorised by the Law Society to conduct investment within the meaning of the Financial Services Act 1986 but must comply with strict regulations such as the Solicitors Investment Business Rules 1990.Strategic planning is an ongoing process and must be the subject of constant and vigilant review.

A once-in-a-lifetime grand scheme is unlikely to be beneficial as it would ignore the changes in personal and financial circumstances of the individual client.The most significant factors to be considered would be marriage, inheritance of money on the death of either or both parents (or other wealthy kin), becoming a parent or a grandparent and retirement.

Divorce and ultimate remarriage may also be factors which change the direction of the client's financial planning significantly.To illustrate this, two important stages in the lifespan of a hypothetical individual, James Hurst, are analysed below.James Hurst is the elder son of Stephen and Miriam Hurst.

His parents are comfortably off financially and have substantial assets.

He has a younger brother, Brian, aged 23.James is a university graduate and has qualified recently as a chartered accountant.

He is employed by a prestigious provincial firm of accountants as an assistant.

His employers provide a final salary occupational pension scheme into which both James and his employer may contribute.James (aged 25) married Susan (aged 22), a school teacher, three years ago and their first child, David, is one year old.

Susan has returned to teaching after maternity leave and is entitled to a contributory pension of the same kind as her husband.James' previous will is revoked by his marriage and Susan has never bothered to make a will.

The couple favour private education for their son.At this stage, it is prudent for James and Susan to make wills to provide for the appointment of guardians of David.

They decide to appoint Susan's elder brother, Stuart, aged 35, and his wife, Gillian, as they have children of their own and are fond of David.

The most appropriate will would probably be one under which James and Susan leave their estates to each other, subject, of course, to a survivorship clause.

The latter would effectively prevent, if they were both killed in, for example, a car crash, their respective estates being aggregated and forming part of the estate of the survivor.Under s.184 of the Law of Property Act 1925, Susan, as the younger, would be deemed the survivor.

The gift-over of residue in the estates of both parents would be willed to devolve on David on his attaining majority or some later age if they so preferred.If they had substantial assets, a mini nil band discretionary trust may be incorporated in both their wills so that up to the nil band rate for inheritance tax (presently £150,000) at the date of death could be distributed either to the other spouse or David (or any other specified beneficiaries) at the discretion of the trustees.

The executors/trustees must, therefore, be appointed from among the friends or advisers of the couple who have some business knowledge and would also abide by their intentions as set out in a letter of wishes signed at the time they executed their wills.Any appointment of the nil band legacy within two years of death would be treated as though exercised at date of death, so no inheritance tax charge will arise by virtue of the appointment (s.144 of the Inheritance Tax Act 1984).If this sum were surplus to the requirements of the surviving spouse, it would be effective to save 40% tax on £150,000, £60,000, as the balance of estate left to the other spouse would be exempt from inheritance tax by virtue of the spouse exception.

Where appropriate, the will should incorporate other specific clauses; for example, extension of investment powers and modification of the powers under ss.31 and 32 of the Trustee Act 1925, a charging clause and receipt clauses if minors inherit, as the circumstances dictate.Susan would contribute to the occupational pension scheme provided by the local authority so she could benefit from any possibility in later life of enhancement if she were seriously ill or sought early retirement.The pension position regarding James is not so clear cut, for his aspirations are partnership or the establishment of his own firm.

In these circumstances he may be well advised to take out a personal pension rather than join his firm's occupational scheme since this would prevent any problems on leaving or transferring out of his present employment.He may be wise to take out permanent health insurance to protect his income in the event of serious illness or injury.

The cost of this form of insurance and the personal pension would have to be carefully analysed, although, in both instances, the premiums would be relatively low at the age of 25 provided he was in rude health.If James' firm provided death-in-service benefits, he should irrevocably exercise his right to nominate the benefits in favour of whomever he wishes where the benefit would otherwise be payable to estate as of right.

If, as is usually the case, the payment of the death-in-service is at the discretion of the trustees, they are entitled to distribute the benefit however they wish among his dependants.James can, of course, indicate his wishes in a letter of wishes although this is not binding on the trustees.

However, so long as he exercises any right of nomination he has irrevocably prior to death, or the payment is at trustees' discretion, no levy to inheritance tax will arise.As James and Susan favour private education for their son David, James may consider insurance-based means of planning ahead for the payment of school fees and the costs of further/higher education for their son through, for example, educational trust plans.Alternatively, a unit-linked endowment policy could be purchased to mature in ten years' time and written in trust for David.

The proceeds of such policies would meet school fees from the age of ten.

Additional policies could be purchased as appropriate.General investment advice should, in addition, be considered as to the type of products invested in at this stage.

In conjunction with this advice, careful attention should be given to ensuring that both James and his wife fully use the personal and married couple allowances so as to minimise their joint liability to income and capital gains tax.If they purchase a home in the near future, advice should be profferred as to whether the property be vested in them as joint tenants beneficially or tenants in common.

Any mortgage they decide to take out should be considered carefully to determine whether an endowment-linked mortgage would be in their best interests or whether they would be advised to take a fixed-rate or capped policy.Finally, if they are very wealthy (or inherit substantial assets) consideration should be given to the setting up of an accumulation and maintenance trust for David and any other children they may have.When it comes to retirement, two principles underpin any financial planning .

.

.

the need for security for both spouses in their old age and the organisation of their assets in the best way possible to alleviate inheritance tax on death .

.

.

so facilitating their family's acquisition of their assets in the most tax efficient way.In the case of James and Susan, on attaining the age of, say, 65 to 70, the form of nil band discretionary will referred to earlier may still be appropriate.

They must, of course, make enduring powers of attorney to cover the situation which may arise on senility/incapacity.They may also contemplate the establishment of an accumulation and maintenance trust in favour of their children and grandchildren.

Assuming neither of them has used up their annual exemptions, £156,000 (at current rates) by each of them may be transferred to the settlements.Provided they survive the establishment of the accumulation and maintenance trust by seven years, the £156,000 will not fall into accumulated.

James and Susan must have no inter est of any kind in the assets transferred to the settlement, otherwise the reservation of benefit rules would apply.They must also ensure they make full use of any available inheritance tax exemptions; such as the annual exemption, normal expenditure of income if available, and gifts to grandchildren on marriage of up to £2500 per grandchild.

Any potential liability to inheritance tax on death could be covered by term assurance.At the age of 70, however, sufficient assets should be set aside to meet any potential liability for nursing home fees which can run as high as £400 to £500 per week.As for the many investment products, it must be remembered that money may be held in building society/bank accounts of different types .

.

.

deposit, current, high interest and immediate access.Investment may be made in Tessas and Peps or gilt-edged securities.

Of particular relevance to the aged are the purchase of annuities out of capital to provide a large and more stable income in old age.

Usually no capital is retrievable on death for the benefit of other members of the family.