Throughout the early stages of your career, the focus is often on building – finding your feet in a career, working your way up and accumulating wealth and assets along the way.
During these years, there often isn’t the necessity to look at ways to protect wealth and as such, it’s common to put off making estate planning decisions until later life.
However, once you reach the stage whereby you have started to accumulate some wealth and perhaps other assets including property, it’s important to put steps in place to afford a level of protection. Unfortunately, many people fail to recognise this point in their life, therefore running the risk of their assets falling into unwanted hands or becoming liable to tax should unforeseeable circumstances arise.
Here are three ways in which you can address the issue of protecting wealth.
Make a Will
First and foremost, you should make a will. Despite the fact that a will is such a fundamental method of seeing that your accumulated wealth and assets are distributed according to your wishes, over 50% of the population do not have one. Without a will, everything you own will be shared out according to the rules of intestacy – which isn’t always the way you might want.
If you already have a will in place, ensure that it is reviewed regularly to account for the law as it evolves and any changes in family circumstances.
Make Lasting Powers of Attorney
One way to ensure your assets will be protected if you no longer have the capacity to look after your affairs is to put Lasting Powers of Attorney in place. These documents, which can be prepared in relation to personal or business matters, allow you to hand over responsibility to a trusted individual/set of people if you are incapacitated for any reason. Due to the increase in life expectancy over recent years and the resulting increase in long-term health issues, Lasting Powers of Attorney are becoming an increasingly popular way to protect wealth and assets.
Think about Inheritance Tax (IHT)
Although there is now an allowance for a main residence alongside the existing nil rate band of £325,000 per individual, Inheritance Tax still poses an issue for many couples and families. It is often possible to structure an estate with the aim of reducing the amount that may be payable and sometimes, it can even be possible to mitigate IHT altogether by investing in certain types of asset or gifting assets to others.
There are complex rules that apply to Inheritance Tax including a set of limits and allowances that a solicitor can advise you about.
Although there are many other ways in which individuals, couples and families can look to protect their wealth, the above represent a good starting point. Should you wish to speak to us about any of these methods, please get in touch.
For further advice or assistance on any aspect of Wills or estate planning, please contact Rebecca on 01457 761320 or email Rebecca@odonnellsolicitors.co.uk.
Rebecca O’Donnell is Head of Private Client at O’Donnell Solicitors.