No matter how you earned your wealth, your top priority for financial planning will likely be keeping as much of that money as possible. The good news is that with sound professional financial advice, there are many ways to preserve your wealth for your family and loved ones. Here are a few things to cover during financial planning.
This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice.
First and foremost, draft a will
A will is the only surefire way to ensure you are preserving your estate the way you want. A will details how your assets will be distributed and even if you only have a spouse and no children, it’s still important to disclose how you wish for your wealth to be dealt with after you’ve passed. Without a will, your estate will be subject to the laws of intestacy and it won’t matter what your wishes were, where and how your wealth will be distributed is out of your hands.
Be a big gift giver
This may seem contradictory to preserving your wealth, but giving cash or gifts worth up to £3,000 each year is exempt from Inheritance Tax. And you can carry forward any unused part of that exemption into the next year, but it must be used then or it will be lost. When your child gets married, you are allowed to give up to £5,000 to them without tax implications. If you are a grandparent gifting to a grandchild, that allowable maximum falls to £2,500, and for anyone else drops to £1,000. Additionally, you can make as many minor £250 gifts a year to any individual as you’d like.
Don’t just stop at money, giving away assets can help too. You can actually give your children a home as a gift and as long as you don’t die within 7 years, the money is no longer considered within their estate and not subject to IHT.
Be trust-worthy
Once you put an asset into an appropriate trust, it will no longer be considered part of your estate. There are a variety of trusts to choose from, and they can be set up at little or no cost. To start the process, a settlor (usually the parents) invests money into the trust and will need to name a minimum of two trustees who will be responsible for ensuring that said investment is paid out according to the settlor’s wishes after their death.
The most popular kind of trust is a Discretionary Trust. One aspect that might make it more appealing is that they can be set up in a way that the settlors (parents) will still have access to income or parts of the capital. Trusts might seem like something for the elite, but anyone with even a little bit of wealth can benefit greatly from establishing trusts during planning.
Working with a professional
Preserving and transferring your wealth is an important issue that needs careful consideration if you want to do it right. To the question of how to achieve your individual dreams and goals, the answer is a robust financial plan that covers your wishes for preserving your wealth. To discuss the best options for you, get in contact with the professionals at Dental & Medical Financial Services today.
