When it comes to financial advice for inheritance, there needs to be a balance between people’s present-day lifestyles and their legacy planning. When money does not seem to stretch far enough today, many people wonder how they can plan for retirement, let alone their legacy. Equally, if you spend too much time on your estate planning, you might miss out on life’s joys. We explore this topic to see how you can plan effectively and enjoy daily living.
Start with daily money management
Spending too much on today’s lifestyle can often hamper people’s future legacy plans. It’s all about balance. When you know how to manage your money efficiently, you can start saving, investing, and protecting it from potential risks. It sounds simple, but life can bring many challenges and inevitable costs. It can be difficult to create a savings strategy when you have rising household bills or sizeable monthly mortgage payments.
No matter how much you earn, make sure you have a monthly budget so you can see your outgoings. Once you have regular expenditures in mind, you can consider whether every expense is needed. When you have complete control of your money, you can enjoy your lifestyle. You will also be able to plan better when building your legacy.
Top tip: Do you have any paid TV or media streaming apps that you no longer use? Cancelling these subscriptions could free up £10 – £20 a month. Over the course of a year, this is £120 – £240, and over ten years, this could amount to £1,200 – £2,400 in savings.
Looking ahead as well as living today
Focusing too much on your legacy can distract you from planning your well-earned retirement. You need to plan how you will spend your time once you retire. Without a clear picture in mind of what you would like to do, you won’t know how much you need to save. Retirement planning is much more than just pensions and savings. These are essential factors, but that’s why financial planning is synonymous with life planning.
Our financial planners have trained with the Kinder Institute of Life Planning. The Kinder method focuses on the individual and their goals before a wealth-related plan is produced. This approach prioritises people’s objectives and values before we talk numbers.
Top tip: Why not spend 30 minutes to 1 hour this weekend reflecting on what you want from life apart from a legacy? Consider what you would do with more time or money, and if there’s anything you would like to accomplish. Start by thinking about the things that inspire you.
Planning your family’s inheritance
Like anything in life, balance is important if you want a healthy lifestyle. If you spend too much time working long hours to build your legacy, you might not enjoy your daily life. Although planning for your family’s inheritance is important, a sound legacy can be achieved through careful estate planning. You need to get an accurate view on how much your estate will be worth in the future to understand your family’s inheritance tax liabilities.
Your estate consists of ‘assets’, such as property, money (bank accounts, savings and investments), and any valuable possessions. It could include expensive items such as jewellery, artwork, and antique furniture, as well as cars, caravans, and boats. Your estate value is the total sum of these assets, bearing in mind future house price changes, inflation and interest rates.
If you leave everything to your spouse or civil partner, they will be exempt from inheritance tax. When both partners have died, the threshold for inheritance tax is currently £325,000. Your family would usually pay a 40% inheritance tax on anything above this amount unless you leave everything to a charity. Also, if you leave 10% of your legacy to a charity in your Will, the inheritance tax is reduced to 36%. Always make sure you have a legally valid Will.
Top tip: Make a list of all your assets and write down an estimated value alongside each one. Calculate your total estate value based on these figures. You will also need to know your assets when writing a Will.
Financial Advisers, Nottingham and Lincoln
If you are concerned that your family will pay too much inheritance tax, then speak to our financial planners. We can look at legal containers such as trusts for holding money and other assets.
When it comes to planning your legacy, you shouldn’t have to sacrifice your current lifestyle.
We believe that to achieve your preferred financial future, you shouldn’t have to miss out on living in the present. That’s why we’re called Balance: Wealth Planning; our mindful approach is holistic and tailored to your personal circumstances.
Through our cash-flow modelling tool, we can help you plan for those “What-if” scenarios so you can protect your wealth. Our financial planning services make your finances more resilient and gives you peace of mind for your family’s future.
If you need financial advice for inheritance, get in touch to speak to our financial planners.
Sources:
https://www.metlife.com/stories/legal/tips-successful-estate-planning/
https://www.gov.uk/valuing-estate-of-someone-who-died/estimate-estate-value
https://www.agespace.org/finance/inheritance-tax/planning-iht-gifts
https://www.gov.uk/inheritance-tax
