As the UK settles into a month of lockdown restrictions, some will be financially relatively untouched, whilst others will be looking towards a very uncertain 2021.
Whilst the Chancellor’s announcement of an extension to the furlough scheme until March 2021 is to be welcomed, it won’t help the hundreds of thousands being made redundant by companies who cannot trade profitably and/or don’t have the resources to pay 20% of wages with far less income.
Is your estate planning up to date?
For many of us, our existing estate planning provisions have probably assumed that those who will eventually benefit from our legacy would be just fine until then. After all, our adult children have their own families, their own businesses and careers. Up until March 2020, they probably no longer needed our financial support in a significant way. Their income may have been sufficient through until early autumn - and then Lockdown 2.0 was announced.
Now they may face redundancy from an unsustainable business, have severely reduced hours, or short-term cash flow issues as the dynamics of their family finances shift.
Equally, you may have had children or grandchildren who graduated from university into a landscape of limited job opportunities. They too may have not potentially needed help in the past, but in the new normal, it’s a different story.
And finally, you yourself may have to adjust your financial planning, to ensure your estate planning is both appropriate and achievable.
Want to get started now? Call us and book your initial phone or online consultation on 023 9319 0377. We’ll discuss your current estate planning provision and suggest ways for you to potentially help out the family now, and moving forward. Or read on for more info.
Top tips for helping the next generation
Here are our top five estate planning tips to help others and yourself ride through until next Spring and keep positive too.
1. Short term ways to help
Depending on your tax situation and projected life span, there are various methods of helping out family short-term. This is because:
“People you give gifts to will be charged Inheritance Tax (IHT) if you give away more than £325,000 in the 7 years before your death."
These can include:
- cash
- property
- possessions such as antiques
If you incur a ‘loss of value’ in a family transaction, such as selling a property to your child for less than it’s worth, the difference between is counted as a gift.
You do have an exemption allowance which allows you to give away up to £3,000 per year without them being included in your estate’s value. You can also carry across any unused exemption to the next year, but only for a single year. You can give as many small gifts of up to £250 per person per tax year, so long as you haven’t given them any other gift exemption on them too.
2. Invest in their future: re-training or a new business
The government have announced that the furlough scheme will be extended until March 2021, but there is no guarantee that the company or job may last that long. Whilst not every ballerina will want to retrain in crypto-crime detection as the government’s advert suggested, there will certainly be a shift in the skills required in the new normal. You might consider a gift that enables members of your family to retrain, upgrade their skills, get a new qualification or set up a new business *before* the final end of furlough, so they are ahead of the game.
It’s worth remembering too that you can give your spouse or civil partner as much as you wish, tax free. Do call us if you are considering this, as it will affect the balance of your mutual estate planning overall.
3. Helping the family with daily expenses
If you are concerned about giving a gift as a lump sum, the IHT rules do allow you to make payments towards another person’s living costs, including children under 18. This can ‘ring-fence’ your gift and allow it to be given over time and used for a specific purpose.
4. Special occasion gifts
If your child is getting married, you can give them a gift of £5,000 or £2,500 to a grandchild. You can also give them ‘normal’ gifts for birthdays so long as you can afford it, and the same child can receive both kinds of gifts. Given that weddings are currently banned in November’s lockdown 2.0, and previously the numbers of attendees allowed was reduced to just 15, this gift could almost fund an entire wedding!
If you do make a gift, remember to make a note of it somewhere so you can track the gifts over time. You might consider making an annual spreadsheet to keep a running total, per year. Your executor/s (and your accountant) will be very pleased with this!
5. Talk to us at Panthera
We have helped many clients over the past few months to assess their estate, realign their assets and restructure their financial affairs. We start with a comprehensive review of what you have in place, and work from there. Every client is different, and you are no exception. There is no ‘one size fits all’ solution, but our experience and empathetic approach ensures we find out what is right for you, your family and their potential legacy.
Other ways to help
For anyone who owns their own business or is a key worker knows, lockdown has not been a holiday or even “time off”. They have been working and coping and trying to plan, with precious little time to do much more. So, as a retired person or just someone who is on top of their estate planning, one of the best gifts you can give during lockdown 2.0 to your family is time. Time to listen, to help, to support, to be there on Zoom or on the phone even if you can’t meet up in person. And, perhaps, help them understand that estate planning isn’t just about wills and IHT, it’s also about a legacy that can also happen within your lifetime.
Call us to discuss
You can find out more about preserving your wealth and your legacy by booking a virtual meeting with us here at Panthera Estate Planning. Together we can take a look at your current legacy goals and work out how to make them happen, or how to adapt your existing estate planning to accommodate short-term help for the family.
Tel: 023 9319 0377
Email: office@pantheraestateplanning.co.uk
Or grab a coffee or a cuppa and spend a few minutes browsing our online guide to preserving your wealth – just click to view online.