Is your inheritance at risk? Protect your home and savings for your loved ones
Written by Adam Kemp on November 30, 2015.
I don’t know about you, but I have worked hard to accumulate the assets that I have and I want to ensure that when I die, they are left to my loved ones. I’ve taken precautionary measures to make sure that my inheritance is not at risk but have you? Many people put off thinking about the inevitable because, let’s face it, facing your own mortality is not a pleasant task but you really need to face the fear and do it.
There are many threats to your home, wealth and savings, both during your lifetime and on your death, which could impact significantly on what you leave behind for your nearest and dearest. These include:
1. Dying without a will
This is a potential disaster for your family. The state – not you – will decide how your estate is passed on, it may be subject to unnecessarily high, and potentially avoidable, taxation and your assets could even be frozen while your estate is in probate which can be a long process causing unnecessary stress, and even financial hardship, for your family.
2. Mental incapacity
If you lose your mental capacity suddenly and have made no arrangements for a lasting power of attorney giving someone else the authority to make decisions on your financial affairs, your family will have to apply to the court for a deputyship. This is a costly, and lengthy process which will freeze your assets until the court makes its decision, and the delay could cause extreme anxiety and financial pressures for your family.
3. Long-term care fees
Paying for long-term care when you get to the stage of life when you need it can seriously erode an estate. With certain estate-planning tools you can protect your assets for your children.
4. Sideways disinheritance
Sideways disinheritance can occur when the first partner in a relationship dies and the surviving partner remarries. Under UK law, a marriage automatically invalidates a will and if the surviving partner fails to make provision for their children in a new will, there is a risk that, in the event of their death, everything could go to the new spouse and the children are unintentionally disinherited.
5. Inheritance tax
Currently in the UK, any assets over the inheritance tax threshold of £325,000 are taxed at 40%. There are a number of tools that can be used to minimise this tax burden.
6. The ‘In-Laws’
You may well enjoy an excellent relationship with your son-in-law or daughter- in-law, but that doesn’t mean you would want them to be a major beneficiary to your estate.
If your intention is to leave your hard earned wealth, however modest, to your children and grandchildren, you should consider what will happen to their inheritance if they suffer marital difficulties culminating in divorce. The inheritance you leave could well be gratefully received by someone you didn’t intend to leave it to.
Believe me, I have come across many situations where people have spent a lifetime building up their assets and providing security for their family only to lose a large part of it due to a lack of foresight and prior planning. With the right tools and professional advice you can protect the assets you have worked hard to accumulate. Why not contact me for a chat about how I can help you ensure that your assets go to those that you want them to and help secure their financial future?