Enterprise series: looking after your legacy

17 December 2021 / Insight posted in Enterprise series, Personal finance

Our multi-disciplinary panel all agree that inheritance tax allowances aren’t likely to become more generous in coming years, so it’s wise to take advantage of the reliefs available to you now. They discussed the various ways that you can protect your wealth and ensure that your wishes are actioned in the event of your death.   

Their key takeaways from the session are: 

  • Do not put off planning for inheritance tax – the earlier you start planning, the more value you can potentially move outside of your estate. 
  • Make use of the current allowances and exemptions by making outright gifts in your lifetime. 
  • Consider setting up a trust for the benefit of your family – this can allow you to keep an element of control over the trust assets and decide who gets what and when.  
  • Make sure you have a Will in place, otherwise government rules will dictate how your assets are distributed, which may also lead to an inheritance tax liability. 
  • If you do have a Will in place, make sure it meets your current circumstances, for example ensure it covers foreign assets, takes advantage of tax planning opportunities, and passes assets to the right beneficiaries. 
  • Consider completing a lasting power of attorney for your personal finances and care, as well as a business power of attorney if applicable. 
  • Personal pensions are outside of your estate and death benefits may be passed to anyone you care about. Make sure your pension contracts have all of the modern flexibilities and your nominations are up to date. 
  • Modelling your personal cash flow can help you evidence habitual gifts out of excess income and explore the scope for larger gifts. 
  • If properly structured, you may be able to make lifetime gifts but still retain control of capital and derive income from it. 
  • Life insurance can be used to provide a lump sum to pay some or all of the inheritance tax liability and, for most people, the cost to their estate will be considerably less than the tax bill. 
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