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Wealth Planning -
Leaving a lasting legacy
Some people leave millions to hospitals, universities and other institutions so that their name can live on through “The Clifton Wing”. But for many of us, the idea of a legacy is more modest. It might be more about helping your grandchildren get their names on the deeds to their first home, rather than your name on a building.
When people think of estate planning, they often think of inheritance tax (IHT) mitigation, and while this can play a part of a legacy plan, it’s far from the whole picture. Ask any accountant, financial planner or tax adviser and they could all come up with a range of ways to shelter wealth from inheritance tax. However, not all solutions would be aligned with your lifestyle, personal preferences or the needs of your beneficiaries.
More important, of course, is to ensure you can live the life you want – having access to income and capital when you need it – for the rest of your life. Once this is secure, you can consider structuring your assets to align with your wishes as to who else can access your wealth, when and how.
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Whatever your ambitions are for your family wealth, it’s important to talk about how to achieve them. Business arrangements and family interdependencies are often more complicated than they might look from the outside.
If you have a business partner or family members who will be impacted if you become ill, or die, it’s much better to discuss matters now, rather than burden them with trying to untangle things when emotions are high.
There are some simple steps you can take to help make this easier.
Write a will and an accompanying letter of wishes
A will is a legal document that sets out your specific wishes as to the distribution of your property and the arrangements for any minor children in the event of your death.
A will can provide certainty at an uncertain time.
Dying without a will can leave your loved ones bewildered. Not only will they need to deal with the huge emotional toll of your death but they will also need to deal with the complexity of the division of your assets and personal items which will be subject to the rules of intestacy rather than your wishes.
A letter of wishes, while not binding, can help your loved ones understand your intentions on matters such as funeral arrangements, personal items, advice for guardians and executors. Unlike a will, this is not a public document, and remains confidential to the executors, trustees or family members.
Writing a letter of wishes, particularly in conjunction with your spouse or partner can air issues you hadn’t really previously discussed: Do you want to be buried, cremated, or leave your body to medical science? Do your partner and your children know this?
And if you are appointing guardians, a letter of wishes is a chance to explain how you want your children to be raised, for example in terms of religion or education. It also gives you the chance to explain any surprises you may have left in your will.
Make a lasting power of attorney
Should you lose mental capacity through accident or illness, your family will need to make arrangements at a time of heightened stress. In the absence of a lasting power of attorney (LPA), a deputy will be appointed through the Court of Protection to make decisions about your property and finances, and also your health and welfare.
If you have an LPA in place, you will have exercised control over who can make decisions on your behalf. There are two types of LPA and you can set up one or the other or both:
- Property and financial affairs LPA
- Health and welfare LPA
Creating an LPA gives you a great opportunity to discuss your expectations for things like later life care, medical treatments, where you want to live and expectations for your finances with your appointed attorneys. It provides peace of mind that your affairs are in the hands of those you trust, should the need arise.
Create an estate plan
You might want to see your children enjoy an inheritance during your own lifetime, you might want to spend all of your wealth and enjoy it yourself , you might want to gift assets to charity, or maybe you simply want to split your assets among family members.
Understanding how to structure your assets so that they can fund your lifestyle as well as provide the legacy you want to leave, is important. Do you feel secure with the knowledge that you have the right legacy arrangements and plans in place? Good estate planning can enable you to place the right wealth in the right hands at the right time. It allows you to consider your views on lifetime gifting, post death legacy and designing an IHT mitigation strategy through non contentious structures and gifting plans.
A professional wealth planner can help you build a plan that offers the right balance of control, access, flexibility and tax advantages designed to deliver effective and controlled outcomes for you, your family and your business.
Whatever your desires are for the future, involving those close to you, be it a spouse, parents, children, business partners, or other loved ones, ensures there are no surprises, and everyone has the financial support they need, when they need it.
If you would like a book a meeting with one of our wealth planners to discuss your financial plans, please get in touch.
Related articles
Regardless of the assets you plan to pass on, such as cash, property, or other valuables, you will need professional financial and legal support to help you establish the best strategy for your lifestyle and goals.
Why everyone needs an estate plan
An estate plan is about more than inheritance tax mitigation or simply drawing up a will. It’s about understanding your preferences and arranging your assets so that you can live the lifestyle you want whilst making provisions for those you love during your lifetime and after your death.
So, How Much is Inheritance Tax?
Inheritance Tax (IHT) is a tax on the estate of someone who has died, including all property, possessions and money.
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Author -
Paul Clifton, FPFS
Chartered Financial Planner, Director – Wealth Planning
Paul is a trusted Wealth Planner, who has built a strong reputation for helping clients identify and achieve their life goals, while maintaining the highest standards of personal service. In addition to helping clients in the West of England and South Wales, he is responsible for developing and managing the regional Wealth Planning team at Arbuthnot Latham.
The aim is to deliver professionalism, experience and honesty. Our bespoke solutions cover wealth/tax structuring, estate planning, retirement planning and financial protection. In addition, we work seamlessly with our colleagues to provide investment management, private and commercial banking services.
Paul has over 20 years of industry experience advising individual and corporate clients. He joined Arbuthnot Latham in July 2020 having previously worked for Hargreaves Lansdown and Chase de Vere. Paul is a Fellow of the Personal Finance Society and a Chartered Financial Planner.