2020 has been an especially turbulent year and in periods of crisis we tend to focus on ourselves and our family’s wellbeing. Now more than ever, it is vital to re-evaluate financial goals and planning for your family’s future. Here we’ll explore some of the most important things to consider when mapping out future financial wellbeing.
Seek professional advice
It is worth reaching out to professional financial advisors when forward planning, all the more so when you’re creating an estate planning strategy. You’ll find that certain aspects of inheritance can been complex, thus having an expert to consult with will ensure you understand current laws and that your family inherits the desired amount.
You can also seek expert guidance on trust funds, gifting money and property to a partner and organising your will. Professionals will know where you can make savings and get the most returns.
Think family meeting
Research shows that “more than half of all wealth transfers fail due to poor preparation and family issues of trust and communication”. Therefore, take some time to speak to your family about wealth and how it is to be managed. This will allow family members to be included in the goals, plans, and will help them identify their roles in the process.
Discussing and teaching financial responsibility will prove to be a vital aspect of future wellbeing. Financial illiteracy can lead to investment mistakes and quick squandering of wealth. The more financially aware your family members are, the better their future will be and there will be less pressure to leave a hefty sum behind. Make yourself available and be open to discuss investment ideas.
Lifetime gifts
Most people tend to focus on the inheritance they will leave once they’re gone, neglecting the possibility of cash gifts that can be given during their lifetime. Cash gifts are considerably more tax efficient for inheritance tax purposes, so plan to make lifetime cash gifts now.
Beginning wealth transfer while you’re alive can have positive outcomes. For instance, cash gifts will enable younger ones to boost their income and contribute to a better retirement fund. Moreover, you can have the privilege of seeing your loved ones benefit from the wealth transfer during your lifetime.
Set up a trust fund
Trusts can be used in multiple ways: for education, to protect your children/grandchildren’s legacy or future investments.
Trusts are great to reduce tax bills and allows you to have better control over how your assets are used by future generations. These can be quite complex, so be sure to enlist help from legal experts who will assist you will all rules, regulations and ensure the money isn’t misused.
These are just some initial steps to consider whilst putting together a financial planning strategy. Taking care of these matters now, will ensure valuable time can be spent on other important things and ultimately ensure peace of mind.
