You send them off to school for a formal education, but some of the most important learning your children will ever have will come directly from you. Most children learn the business of wealth-building from their parents. The basis of good financial habits starts with saving, which starts as soon as they are old enough for pocket money.
As they grow into adults, they will probably ask you questions about planning for the future, investing and pensions, questions that you are probably happy to answer โ or pass on to your Continuum Adviser.
But what happens when you are no longer there to answer those questions โ and when the questions are about inheriting your wealth?
No matter how many good financial habits you have helped your children learn by the time they are adults, the chances are they will be unprepared to inherit your wealthโ unless you make the most suitable preparations while you are alive.
You need to make things as easy as possible for them at what is bound to be a traumatic time. We have all heard about children who have inherited wealth, and lost their way in life as a result.
Fortunately, with a little forward planning, you can still ensure that your children have the answers and the help from you they need, even if you are not there to act as their financial guide and mentor any longer.
1. Look at your loved ones
You know your children and you know what their financial needs are likely to be. Inheriting a portion of your legacy could be life-changing for some of them, who might not have enjoyed financial success in the past. Others who have been able to build a rewarding career and wealth of their own might not experience much of a change at all.
You also know which will have the maturity to make good use of the wealth you leave, and which might be better off with a trust fund to provide a regular income which will leave capital untouched.
Talk to them โ and help them have realistic expectations of what they may inherit.
2. Look at your wealth
Does your portfolio have equity investments, bonds or funds, or are you invested in things like property or land?
What you have to pass on will have a big impact on your plans. Do you have a large house, for example, that you would like to go to a child with a large family? Do you have a business that would be perfect for a particular son or daughter to take over?
Some assets are easier to pass on than others โ having the most appropriate arrangements in place is vital to keep the taxman at bay, as well as keeping your loved ones from falling out.
3. Look at creating some safeguards
You may need to provide some practical help which can build your childrenโs financial skills and prepare for a large legacy. Encourage them to put together their own team of financial, tax, and legal professionals who will help them make the most appropriate use of their inheritance.
If your children are not ready to manage wealth responsibly, you may want to provide some safeguards such as a family trust that releases money under conditions that you establish in your legacy plan.
This can be surprisingly simple to do โ and properly set up, it may help reduce inheritance tax liability too.
Even the most responsible children might not be capable of managing your company, property, or an art collection. Talk to your children about how their abilities and goals fit with how you want more complicated assets to be managed.ย
4. Make your will
A will is essential if you are going to pass on your wealth in the ways you want. Without it, your worldly wealth will be distributed according to the laws of intestacy. These are designed to be fair and transparent, but like all laws they are rigid, and may not fit your plans or your familyโs needs. Writing a will is also essential if you plan on your loved ones, rather than the taxman, being the main beneficiary of your worldly wealth.
Getting some expert advice from your Continuum adviser could show you how your will could make your legacy a great deal more tax efficient.
5. Get expert help
Knowing the most efficient way to draw up a will to keep the taxman at bay is only one of the many reasons for involving a Continuum adviser in your succession plans.
Our succession planning service includes some proven methods that will help you pass on more of your wealth to the next generation
We can help you every step of the way, from advising on the most suitable ways to pass on assets, to setting up a trust fund.
Potentially even more important, we can work with your loved ones, to help them find the financial answers and support they will need when you are gone.
The sooner we talk to you โ and to them โ the more we can do for all of you.
Why not call us today?
The Financial Conduct Authority does not regulate will writing, taxation and trust advice
When investing your capital is at risk
Levels and bases of and reliefs from taxation are subject to change and their value depends on individual circumstances. We recommend that you seek professional advice on personal taxation matters.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to a suitable estate planning strategy, you should seek independent financial advice before embarking on any course of action.
