Protect your wealth

06/07/2019

Most of us work all of our lives to provide for our families, investing in our home, building up savings and growing businesses.

Everyone knows that you need an up-to-date will to ensure all that you’ve worked for goes to the people who matter most to you when you pass away.

However, I’m always amazed by the number of people, many with significant assets, who don’t seek expert advice to make sure their wealth is fully protected.

For example, is your spouse or loved one named as the recipient of your death in service benefit? The benefit is a tax-free lump sum that is sometimes paid if you are employed at the time of your death. It is often between four and 16 times your annual basic salary, so is a very valuable asset.

If this significant lump sum is added to the estate of your partner when you pass away then on their death, it will often push the joint estate over the available inheritance tax threshold, leading to 40% tax being paid on anything above this limit.

Setting up a trust for death in service benefits, plus life insurance and even pension lump sum payments can be a way to provide for your loved ones, children or grandchildren while minimising the amount of inheritance tax that your estate will be liable for.

Trusts are complicated, so do take expert advice, but when set up correctly they are straightforward to use and very cost effective.

If you are a business owner, you should consider how your interest in the business will pass on your death. In many cases there are no plans for who will continue to operate the business or who will inherit the deceased’s share, which has a significant impact on what the business is worth.

It is essential to consider putting in place arrangements such as a cross option agreement, appropriate life insurance and a well-drafted will. The combination of these solutions goes a long way to ensuring the business survives you, creates cash value for your family and, done correctly, saves inheritance tax.

These issues may be tough to raise with business partners and your other half but nowhere near as difficult as the prospect of your family struggling financially if you put off the conversation.

To help high earners and business owners, we offer a free consultation where we carry out a detailed assessment of your estate wealth, business interests and highlight where measures can be taken to protect wealth from the various risks it is exposed to.

To arrange an appointment or discuss any of the issues outlined, contact me at david.birchall@beswicks.com or phone 01782 205000.