Four ways to protect your wealth
By Laura Brereton, solicitor at Harrison Drury
While many people spend the early part of their careers focussing on growing their businesses and building wealth, it is important not to lose sight of the longer-term goal of protecting your family and providing for their future.
It’s relatively common for people to put off making estate planning decisions until later life. It can be difficult to decide how to provide for various family members and many people want to make sure they’ve arranged their affairs in a tax-efficient way.
There are various things to be considered when thinking about estate planning but there are some key points that ought to be considered by everyone:
Make a will
The most important thing you can do when thinking about succession planning is to make a will, or make sure that your existing will is reviewed regularly as the law evolves and family circumstances change.
Over half of the adult population do not have a will and it is often easy for people to put off making one, but it is a key part of succession planning.
Over half of the adult population do not have a will.
Inheritance Tax planning
It is also important to consider how inheritance tax may impact on your estate and to look at ways in which the inheritance tax bill could be mitigated.
It is often possible to structure your estate in such a way as to reduce the amount that may be payable, either by investing in certain types of asset or gifting assets to others.
As children start to get older many parents and grandparents want to consider giving them a helping hand with house deposits etc.
This can be an effective way of passing wealth down the generations while reducing the size of a parent’s or grandparent’s taxable estate.
There are many other exemptions which apply to lifetime gifting and, if your estate is likely to be taxable, it can be well worth making the most of these.
While many people are happy to make outright gifts to family members, some wish to consider creating trusts which can provide for their chosen beneficiaries on an ongoing basis.
There are advantages and disadvantages to both these options and it is important to weigh these up before making any decisions.
Powers of Attorney
An increasing number of people are now choosing to make Lasting Powers of Attorney, whether in relation to their personal or business matters.
These documents can help to ensure that your affairs continue to run smoothly if you are incapacitated for any reason.
There are of course many other ways of protecting your wealth. Speak to your professional advisers, including lawyers, accountants and financial planners to ensure this is done in the most effective and tax-efficient way.