If recent months have taught us anything, it is that nothing is guaranteed. Never before have we seen circumstances such as the ones we have been experiencing of late, with schools being totally closed, workplaces out-of-bounds and all leisure activities suspended indefinitely. Two of the most challenging elements of recent times have been the sheer lack of clarity as to when anything might revert back to some semblance of normal and the inability to see loved ones.
What this has done for many of us is highlight the importance of family. It has also shown us that since we never quite know what is around the corner, we need to be adequately organised when it comes to important matters such as our financial assets.
If you have amassed a particular value of property and other monetary assets, there is the chance your estate, in the event of your passing, will be taxed at a high rate of 40% known as Inheritance Tax or IHT. However, there are ways to minimise your exposure to this if you make the provisions early enough. No one would want to leave their family in the position of having to hand over a massive chunk of their inheritance to the tax-man if they don’t have to – protecting their futures is, of course, a priority.
There are specific ways you can ensure that your money is protected to its fullest so that your family’s future is the safest it can be and that’s with estate planning. Take a look to find out how to protect yours:
Speak to the experts
First and foremost, you need to speak to experts in specific fields. Estate planning is a highly complex affair with a vast range of options available and intricacies to it. Understanding all of them can be a challenge and one perhaps best left to those in the professions trained to handle them and advise on such matters.
Employing the services of a law firm who look after the estate and IHT planning and a Financial Planner to put the appropriate measures in place for your assets will save not only a lot of your hard-earned money but also a lot of stress and potential heartache.
Create a plan
Once you have spoken with your advisers, then comes the time to put some of their recommendations into action. They will no doubt have suggested some of the following in order to mitigate your exposure to IHT and to better protect your family’s wealth in the event of your passing:
- Gifting – there are certain rules around what you can gift away each year to remove money from your estate whether it be to a partner or other members of your family
- Place assets into a trust – there is a huge range of trusts available which hold your money in different ways, for different generations and to ensure the assets are protected from excessive taxation
- Charitable donations – this will not only do some good, but it could also reduce the tax applied to your estate if it reduces its value below the threshold or indeed if you gift away over 10% of the value of your estate, your taxation level drops from 40% to 36%
- Life insurance – there are specific policies you can take out which would cover the cost of the IHT bill rather than it having to be paid out of your estate
Write a will
Having a robust plan is the first step to proper estate planning, but even with one in place, you must also have a will. This formal, legal document, will detail what should happen to all your money, property and possessions in the event of your death. Basically, everything in your estate should be covered by it. If you don’t have a will in place, your estate will instead be governed by the law intestacy, and as the law might dictate something different, it might mean that your wishes are not observed.
These uncertain times have given us more of a focus on what matters to us, and our families have been integral to this. We have also seen that nothing is guaranteed and we simply can’t predict what is around the next corner. So if you want to ensure your family is protected financially and your assets are passed on to them as fully as possible, you can make specific provisions now to make that happen. Enlist the advice of specific experts in these fields, and you won’t need to worry that your estate is reduced or that your wishes are not followed when the time comes.