What’s the point of estate planning?

Inheritance Tax is one of the most controversial taxes levied on the British public. To some it represents the redistribution of wealth and the creation of a more equal society. To others it is a further tax on money carefully saved during a lifetime of work – and taxes paid.

Conversations about Inheritance Tax

As a financial planner Inheritance Tax planning is one of my most sought-after areas of advice. However, what can start as a narrow conversation around tax often broadens quite dramatically. After all, the easiest way to avoid Inheritance Tax is to give away all of your savings.

• “But I don’t know how much I need to have saved in order to live the rest of my life in comfort.”

• “What about if I need long-term care? How do I pay for it?”

• “I don’t like the idea of my children being given the money outright. I may not approve of what they spend it on.”

• “I want to stay in my home for as long as possible, and certainly do not want to pay rent to stay here!”

This conversation about Inheritance Tax can quickly escalate into a discussion of your wider long-term financial plan. If you don’t have a financial plan it is almost impossible to do anything meaningful to manage Inheritance Tax – but people often find this out when it’s too late.

Inheritance Tax as part of your financial plan

Your financial planner will begin by using cashflow modelling to establish whether you have enough money to live the life you want in future. This focuses on how much income you will need and any expected inflows (such as downsizing your house) to forecast your finances. It is the basis for all future planning and is crucial to your long-term financial wellbeing.

How do you want to leave a legacy?

Once we know whether you have enough savings to live comfortably, we can consider your legacy. At this point we would discuss your estate planning wishes in more detail:

• How do you feel about making outright gifts to your children or grandchildren?
• Do you want to keep control over how they spend the money?
• Would you like the option to access the money in an emergency? What sort of emergency might this be?
• Would you instead prefer to provide gifts for specific areas, such as a house deposit or school fees?
• Would you prefer to leave everything when you die, rather than making gifts during your lifetime?

The key to a successful estate planning strategy is to understand what is most important to you when it comes to your family and the future. Only by understanding this can your financial planner best advise on the right combination of gifts, trusts, investments and insurance to make sure you achieve your goals for leaving a legacy.

Speak to an expert to find out more about estate planning

To find out how we could help you with estate planning please book an initial consultation with our financial planners. You can reach us by calling 020 7189 2400, emailing contact@tilney.co.uk or completing this online form.

Or if you’d like more details about estate planning and the rules around Inheritance Tax you can download our free guide.