Life happens. Change is inevitable. Things happen that we cannot control and we only try to prepare as well as we can. Planning your estate early might seem overwhelming, but unfortunately, no one knows when their time will come. To give you and your family peace of mind, estate planning should be given careful consideration.
If you have joint assets above £1m (£325,000 for a single person), in addition to any pension funds and life insurance policies, an inheritance tax at the rate of 40% is potentially a major concern. Without proper financial planning, the harsh reality is HM Revenue & Customs could become the largest beneficiary of your estate following your death.
If you recognise you do have more than enough to live your life to the full, you need to think about reducing your estate to avoid unnecessary taxes. Gifts (if they are above the annual allowance) could be a good way to start as they will be completely out of the estate after just 7 years.
Utilising your tax allowances are also part of estate planning. Pensions, Business Property Relief (BPR) and trusts could be part of the estate management strategy. Pensions are generally outside the estate for tax purposes, which can be beneficial to estate planning. If you have been a business owner for at least two years, BPR could also be an option. Although the value of your business will be added to your estate upon your death, the estate could receive up to 100% relief. Trusts are used to give assets to your beneficiaries quickly, potentially without incurring an Inheritance Tax bill. A trust can hold assets or insurance policies and can be set up exactly to your wishes.
While it is important to think about what you can leave behind, it is also important to remember that you have worked hard for your money and you should make sure to enjoy it. Don’t leave the thing you always wanted to do until “one day”. With lifestyle financial planning you could identify, achieve and maintain the lifestyle you want.
We offer estate and inheritance planning services that maximise the net value of the estate by reducing taxes where possible.
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Our website offers information about financial products such as investing, savings, equity release, mortgages, and insurance. None of the information on Sunny Avenue constitutes personal advice. Sunny Avenue does not offer any of these services directly and we only act as a directory service to connect you to the experts. If you require further information to proceed you will need to request advice, for example from the financial advisers listed. If you decide to invest, read the important investment notes provided first, decide how to proceed on your own basis, and remember that investments can go up and down in value, so you could get back less than you put in.
Think carefully before securing debts against your home. A mortgage is a loan secured on your home, which you could lose if you do not keep up your mortgage payments. Check that any mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice.
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