Life & Legacy Blog - Part 1: Introduction

We come across a lot of clients who find themselves facing a difficult question,
how much money do I need to retain in order to provide a good lifestyle, for the rest of my life whilst also gifting money to family or important causes?

For the latter, our clients, will often want to enjoy seeing their loved ones benefit now, and reduce the eventual Inheritance Tax (IHT) liability.

There is, of course, an inbuilt tension here as the more you give away, the less is left for you, but the more you retain, the less that family/causes get now and, indeed, may ever get, after the tax man takes his 40% on death.

It’s an issue which most often comes up where you have settled into retirement and some sort of pattern of expenditure has been established such that you begin to have some confidence that not all your hard-earned savings will be needed to support you throughout your retirement. However, as well as none of us knowing how long we will live, another big unknown is what healthcare costs we might require in later life – this might be nothing or it might be £50,000 per annum, and, while your property may fund some of those years, what about if you want care at home, or a partner remains in the property so it’s more difficult to release equity?

There are no easy answers, but what good financial planners can do is help you to understand where you are now, what your situation could look like over the coming decades in various scenarios, and, based on what the most important factors are for you, what a sensible approach to dealing with this question might be now, and as it evolves over the years. We’ve given this advice for years as part of looking after our clients, but we’ve now brought our thoughts together into a series, which we are calling ‘Life and Legacy’.

In the next blog we’ll talk about the legacy side, looking at valuing your estate, understanding your potential IHT liability, and some of the simple actions that might be taken. In part three, we’ll look at healthcare, what the costs might be and the likelihood of you requiring care are. Then, in the final blog in the series, we'll bring the elements together to show how we would work with you to determine what actions you might take now and in the future.

The value of investments and the income derived from them can fall as well as rise. You may not get back what you invest. This communication is for general information only and is not intended to be individual advice. It represents our understanding of law and HM Revenue & Customs practice. You are recommended to seek competent professional advice before taking any action. Tax and Estate Planning Services are not regulated by the Financial Conduct Authority.