17 September 2014
Why planning ahead pays dividends for future generations
We're all living longer and for many of us that's a good excuse to put off those "must do" things, such as making a will or planning for our retirement.
Yet the truth is the sooner we start the easier it will be, both for ourselves and the next generation.
At leading Thames Valley law firm B P Collins, the private client team can provide tailored advice and guidance on the issues that matter; from inheritance tax planning to the creation of trusts; from making a will to arranging lasting powers of attorney, and even how to plan for long-term care needs.
Vicky Johnson, associate solicitor, said: "When people begin working they are encouraged to join a private pension scheme, but they seem to think that's all they need to do until later in life.
"The truth is that as soon as you gain assets such as a property, get married, have children etc., you need to start planning for any eventuality. Although we don't like to think about it, dying at an early age or becoming incapacitated through accident or illness does happen, and at such an emotional time, the last thing a family needs is the additional stress of having to go to court to access their money or fight to stay in their home because of a legal dispute."
This is especially important, she said when, for example, individuals may have been married and divorced previously, with children from each marriage or; alternatively, where one person owns and runs a business and is the main breadwinner as well as an employer.
Industry figures estimate some 70% of people haven't made a will and although many people are now choosing the DIY will option, Julie warns these can be a false economy.
"Making a will may sound simple, but in fact it is incredibly technical and complicated and the consensus is there will be a rise in contested DIY wills because of the lack of expertise and knowledge with which they have been completed," she added.
An even greater proportion of the population have not taken steps to set up a lasting power of attorney, which allows someone to deal with your affairs if you are unable to do so through mental or physical incapacity.
Julie calls this an "absolute necessity" to ensure one's financial affairs run smoothly at a time when all other matters can be in turmoil.
Inheritance tax planning is another key area of the firm's expertise, helping clients take steps to ensure future generations benefit in the most tax effective way.
Colleague Christine Moore, senior associate solicitor and estate planning expert, explained that the team will sit down with clients, look at their current wealth and assets and recommend the best way forward.
"Clients often tell us they want to leave everything to their children outright but, if their parents are still alive it's likely they'll inherit further monies and, as the children are growing up, they're probably already accumulating wealth of their own," she said.
Flexibility and protection
"Simply passing wealth down to the next generation outright means the family face paying inheritance tax on the death of each generation at 40% but, by looking at the whole picture, we can recommend options such as trusts from which future generations can benefit while potentially lessening the overall tax burden. It's about flexibility and protection of the young whilst minimising the tax bill. Consideration should be given not only to the clients' financial circumstances but also to those of their children and grandchildren."
Trusts can offer different solutions for different generations. For example, an elderly couple may consider leaving their share of their house by will into trust, so that on first death at least some of the estate is ringfenced for the next generation and hopefully disregarded in any means test assessment for the survivor's long-term care.
For the younger generation meanwhile, lifetime planning involves gifting assets into a trust for children and grandchildren so as to reduce the inheritance tax payable on death, whilst keeping those assets in an environment which offers protection for the young or vulnerable, or against a child's later divorce or bankruptcy.
From these examples alone, it's obvious that true estate planning requires the advice of experts who really know what they are talking about. And with a reputation as one of the best law firms in the region, B P Collins' clients can be sure that's exactly what they're getting.
If you would like to speak to one of B P Collins' private client experts, please call 01753 279031 or email firstname.lastname@example.org.