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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 Pennington 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.

Published

10th November 2020

Author

Steve Pennington

Category

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 every possible solution 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.

 

Family building blocks

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. 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 will can provide certainty at an uncertain time.

A letter of wishes, while not binding, can help your loved ones understand your intentions with regard to things 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? If you are appointing guardians, it’s 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; Property and Financial Affairs and Health and Welfare. Individuals can set up one or the other or both. Often the same attorney(s) are appointed for both, but you can have separate attorneys for each LPA if you prefer.

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.

 

Your 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 an effective and controlled outcome 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 qualified and experienced wealth planners to discuss your financial plans, please get in touch.

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Author -

Steve Pennington

Steve Pennington

Head of Wealth Planning

Steve Pennington is a Fellow of the Personal Finance Society, a Chartered Financial Planner and a Chartered Fellow of the CISI. Steve heads up the Wealth Planning business at Arbuthnot Latham.

Find out more about the Wealth Planning Team.