Even if you don’t think of yourself as a wealthy person you may still have property, savings, a pension and other assets that can add up to a significant sum.
Managing that wealth effectively will help you enjoy the retirement lifestyle you want. It will also ensure that the assets you’ve worked hard to build up will pass to the people you want to benefit, rather than the taxman.
For many, this means a three pronged strategy: Protect, Release and Pass On.
Protecting your capital has a number of elements. Making a Will is a basic and essential step that ensures your wishes are carried out after you die. But it’s just as important to make sure you review your Will every few years so that it continues to reflect your current circumstances and wishes.
As part of your inheritance planning you may need to create trusts to protect the interests of your spouse, partner or children, and ensure that your specific wishes are carried out. Transferring assets into a trust can take them out of the scope of inheritance tax. However, there are some fairly complex rules that apply so expert professional advice is essential.
Although none of us likes to think that it would affect us personally, we have to accept that we might, one day, be unable to manage our financial affairs or make important decisions for ourselves. Creating a Lasting Power of Attorney while you are still fit and well is always a sensible decision.
Releasing your wealth in a planned way makes all the difference when it comes to meeting your personal financial objectives. Now that pension fund holders are not obliged to buy an annuity there are more decisions to make about how to invest and draw pension income.
For those who want a steady income without taking any risk an annuity may still be appropriate. For others, the options of a lump sum or drawdown funds will give them the control to access funds in line with their outgoings and the way their lifestyle evolves during retirement.
Careful planning avoids you paying unnecessary tax and ensures that you balance saving and spending during your working life. You can then, for example, build up the level of savings you need without making more sacrifices than you need to.
Equity release is an increasingly popular way to unlock the wealth tied up in your property before you die. Again, there are many schemes available, often with complex clauses in the small print. Getting professional advice can help you avoid an expensive mistake.
There are many options – such as a deed of gift – to pass on your wealth tax efficiently. For example, trusts can help to protect one partner’s share of a property should they die and the surviving partner needs to go into care. Lifetime settlements can, in some cases, ensure that the value of your property isn’t used to pay for care costs and can reduce probate costs, helping to pass on more of the value of your estate.
Efficient managing of estates and affairs after death can make a substantial difference to the total tax paid on an estate. With the right advice you can use deeds of variation and disclaimers to effectively pass an inheritance on to other beneficiaries and save tax.
You may be reading this and thinking that there is lots to think about and to plan. And you would be right. This is why getting professional advice makes such a difference to how you benefit from your wealth while you are still alive and pass on as much of it as possible to your chosen beneficiaries.
The team at PowellsLaw will be happy to talk through your priorities and options and carry out the necessary legal work to ensure you, and the people or good causes you choose, benefit from the assets you’ve acquired. To talk to an experienced member of our team call us on 01934 623 501 or visit our website.