Futureproofing your wealth – the importance of estate planning

Passing on wealth to future generations is one of the most rewarding things you can do with your hard-earned money. The assets you pass on could help your children or grandchildren buy homes, get great educations, or set up their own business. So, ring-fencing as much as you can in order to mitigate the amount of Inheritance Tax or IHT you will need to pay is an important part of estate planning – and future financial wellbeing.

Inheritance Tax used to be something that applied only to wealthier individuals. That’s no longer strictly true. You may be liable for up to 40% Inheritance Tax on your assets, but only after an allowance known as the Nil Rate Band or NRB has been applied. The NRB is good news. It is currently set at £325,000. As the Nil Rate Band can transfer across to the surviving partner of marriages and registered civil partnerships, you could end up with a tax-free allowance of up to £650,000 if your estate meets the right criteria. If you leave your main residence to direct descendants you may also benefit from a residential nil-rate band of £175,000 each.

You should also think carefully about the sensitive issue of whom you make a beneficiary or ask to be a Trustee. Some of your loved ones may not be in a good place to look after money. For example, they might be facing a divorce or bankruptcy, or simply too young right now to know what to do for the best.

Here are three practical things you can do right now to help safe guard your wealth:

  • Make sure your financial affairs and your Will are set up to allow the tax- efficient transfer of your assets when you die.
  • Start transferring assets before your death through the prudent use of lifetime gifts.
  • Create a tax-efficient fund to provide a legacy or to help your beneficiaries pay any Inheritance Tax due.

Building your wealth takes enterprise, vision, hard work and an occasional lucky break.

Protecting that wealth also takes foresight and expert trust and estate planning.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

Advice relating to a Will involves the referral to a service that is separate and distinct to those offered by St. James’s Place. Wills and Trusts are not regulated by the Financial Conduct Authority.