Succession planning isn’t something that can be done on a whim, or at the last moment. In fact, it’s recommended that you start as early as possible to ensure that you’ve got a good enough plan in place to manage anything unexpected that might come up. It can be designed to be flexible and adapt to changes along the way.
The process of succession planning can also be complex, so don’t go it alone. Making sure you get tax advice, legal advice and financial advice ensures that you’re making the right choices when it comes to your finances and legal affairs. It’s important to make sure that these advisors are talking with each other to make sure there are no gaps or contradictions in your plans, avoiding potential disputes further down the line.
1. Understanding Your Current Situation
So, you’ve made the decision to secure yours and your loved one’s futures, but what comes next?
Getting a better understanding of your estate can ensure that the things that are important to you are included. As the value of assets can change over time, it’s a good idea to make sure everything is regularly reviewed. A cash flow analysis with a financial planner is a great way to get started and begin to answer these questions and help you achieve your financial goals.
2. Tools For Effective Succession Planning
You may want to consider the following options when looking at what works best for you and your situation:
- Wills - Creating a Will ensures that you have complete control over who inherits from your estate and will make sure that those you want to be looked after are taken care of. It’s advisable to review your Will with a professional, and ensure it’s prepared in the most appropriate and tax efficient manner. There are many tax reliefs you can use dependent on your circumstances.
- Lasting Powers of Attorney - A Lasting Power of Attorney (LPA) is a legal document that allows you to plan for what should happen to you, if old age, illness or injury leave you unable to deal with your own affairs. It can be made relatively quickly, and can be costly and time-consuming for your loved ones in the future if don’t have one in place.
- Gifting - Gifting can be an effective way of passing on wealth without incurring additional taxes (as you may do with a Will). Gifting early gives you the chance to watch your children or grandchildren achieve their ambitions, with the help of the money you’ve provided. Whether it’s money, assets or property, they can be factored into your plan.
- Trusts - Trusts have a wide variety of uses and can be used to make provision for children, grandchildren or vulnerable adults in a way which allows you to retain control of the assets while still excluding them from your estate for IHT purposes.
There are two different types of LPA. One covers your property and financial affairs decisions and another for your health and welfare decisions. You can have more than one attorney to make sure your wishes are respected.
However, it’s important to understand the limitations and exemptions to gifting before getting ahead of yourself. Taking financial advice will make sure that you make the best choices to avoid paying additional tax.
It’s also a good way to reduce inheritance tax. Consider how much you could gift now, while still leaving plenty to enjoy for yourself.
Different types of trust can hold money, investments, land or property – for you, your family, or anyone else who you’d like to benefit.
3. Open Conversations With Loved Ones
Talking is key. Keep your family updated on your financial plans to manage everyone’s expectations.
Clear communication can help your loved ones understand any decisions that may impact them now and, in the future, avoiding disputes in the years to come. It can also help with their own plans and open other options they hadn’t considered before. Knowing your plans may influence decisions they make about their career, where they live, and life choices for their own children.
4. Be Prepared For Change
We understand that life constantly changes. When you’re making decisions so far in advice, you should expect to make changes to adapt. Family circumstances change, and so do priorities as you get older.
This doesn’t mean that you can’t put solid plans in place, it’s just worthwhile to make allowances in your succession plan that can be modified to suit your position at the time.
The main aim of succession planning is to leave a legacy for your loved ones to enjoy. Our friendly and approachable team can offer support and clear guidance, advising you on what action to take to ensure your wishes are followed and your best interests are looked after.
Contact Us Today
Contact us today for help and advice. You can call us on 0808 291 2252 or contact us online.
Supporting You And Your Family
Future planning is one of the biggest investments you can make – not only for yourself, but for your loved ones as well. Please visit Supporting You And Your Family for more ways you can plan for the future.