Key Points to Consider:

  • Despite the availability of Gift and Inheritance Tax Thresholds and Exemptions, Estate planning is still important no matter how big or small your net worth.
  • Family dynamics can complicate transferring wealth and working with a Financial Planner and Solicitor can help you get things sorted.
  • Talking with your family and loved ones in advance can play an important part of your Estate / Inheritance Tax planning.

Over the years, Estate Planning has been one of the most common topics discussed with clients, with each of them wanting to discuss how best to distribute their assets in a way that not only tax efficient but also reflects their personal preferences, values and addresses the needs of their heirs.

The interesting part of these discussions is that there isn’t a ‘one size fits all’ and when looking at passing on wealth there are no set answers and what is right for one family could be completely off base for another.

Regardless of your tax status, the key to impactful wealth transfer is to view your estate as your legacy. As you contemplate your choices you need to think of your estate plan as your opportunity to help and protect the people you care most about and I always recommend the need to keep each of the following points in mind:

Carefully exploring your options

Modern families generally involve complex relationships and the more unique your family dynamic, the more thoughtful you will likely need to be. As such, take time to consider all options, work with experienced professionals with whom you have rapport and trust while remaining true to yourself and what you want to achieve.

Understand the risks of dividing your estate unequally

In an attempt to achieve maximum tax efficiency, dividing your estate unequally between children or grandchildren can cause you to run the risk of communicating that you care about one more than the other, or that you support one’s life choices over another’s.

Therefore, while it may seem logical to provide extra assistance to a child with fewer resources or special needs, you need to balance that with the emotional message you send. Also, as circumstances change, by the time your estate is fully distributed, the financial situation of your heirs may be very different to what they are today.

If, after careful thought, you decide that unequal distribution is the best path, make a special effort to explain your reasoning to your heirs now. If you are honest about your reasons, hopefully they will understand.

Examine your reasons for maintaining control

We’ve all heard the phrase “controlling from the grave”. In certain circumstances it maybe natural to want to control your money, control generally doesn’t work so well for people. If you fear that an heir will be irresponsible with his or her inheritance then by all means explore setting up a Trust but be careful not to set conditions with the intention of controlling an heir’s personal life decisions as when all is said and done, this approach could backfire.

Consider gifting a portion now and more later

No doubt about it, gifting during your lifetime can be a powerful win-win. Not only do the recipients benefit from your generosity, but studies have shown that givers benefit in terms of psychological satisfaction. Money can’t buy happiness; but as it turns out, giving can.

It would be negligent however if I didn’t include the following caveat: Never let your generosity threaten your financial security as there will be no joy for anyone if you need to rely on the loved ones you tried to help.

Explain your decisions

Last but possibly the most important consideration is to ensure, that once you’ve created your plan, to talk to your family. As much as you may believe that your decisions are clear and correct, don’t risk the potential for misunderstanding. Invite their questions and respond honestly as the dialogue that ensues may be as valuable as the financial resources you pass on.

How we help

We can take the effort out of this for you, demonstrate how this will work for you and your family and provide you with one cohesive plan.

You can arrange a meeting by clicking here to access my diary or alternatively email or call 087 8144 104.

Source/Ref  – Article by Carrie Schwab-Pomerantz.