Over the past few weeks many of our clients have been keen to review their financial situation, to check how fit it is in the current climate. With this in mind, David Pugh, our Chief Strategy and Commercial Officer, explains what it makes sense to consider when undertaking a wealth workout.   

It’s always useful – now more so than ever – to keep a close eye on your financial fitness, as well as your own physical health. In fact, doing so can help your own peace of mind and hopefully ensure you are in a strong position when normal activities begin to resume.

Review your Will
It’s useful to always check your Will every five years or so to ensure it’s as you need it to be, especially if your personal circumstances change through marriage or divorce. As your children grow up, and grandchildren arrive, you may also want to review your plans. Make sure your executors are still valid, and do bear in mind Inheritance Tax too – you may be able to reduce it through gifts to registered charities or through other allowances.

Set up Lasting Powers of Attorney
One of the most important documents when it comes to estate planning is a Lasting Power of Attorney (LPA). An LPA allows you to elect who can make financial and health decisions on your behalf if you are unable to do so. It’s important to have one, whatever your age, so that if the need arises the right tools are in place.

Consider Inheritance Tax  
Inheritance Tax (IHT) can be significantly reduced with careful planning. One of the most useful ways to consider is by providing regular gifts – perhaps to children or grandchildren. These regular gifts out of income fall outside of the IHT net, but do remember to keep a record of payments in case of any query by the tax authorities.

Review your investment portfolio
Checking that your portfolio is well structured and in line with your attitude to risk is especially important at the moment. Review your pensions too as consolidating them might offer some benefits, although do seek advice if you are nearing the lifetime allowance (£1,073,000 in 2020). Given the current climate, you may be more comfortable making a monthly contribution into investments rather than a lump sum.

Take advantage of tax allowances
There are a range of tax allowances available every year including ISAs, pension tax relief and Capital Gains Tax so check you are using them to best effect. Married couples and civil partners may benefit from dividing assets to make the most of any allowances.

Nominate pension benefits
Don’t forget to nominate who you would want to benefit from your pension assets. These tend to fall outside of your estate, but you can usually nominate a beneficiary through your pension provider’s website.

Get your paperwork in order
On a regular basis, and at least annually, it’s useful to review and shred any unnecessary paperwork. Create an asset summary – which contains details of what they are, where to find them along with bank account numbers and passwords – and let your family or executors know where to find a copy.

Check your insurance
It’s useful to ensure that your life insurance, income protection and critical illness policies are relevant and offer you the best deal. You can protect any life policy with some sensible trust planning, to help reduce any exposure to IHT.

Reduce your bills
By reviewing your outgoings you may be able to identify unnecessary or overly expensive bills. Simple changes such as changing energy supplier or comparing car and home insurance could significantly reduce your monthly bills.

Review cash savings
If you have cash savings in a current account you may benefit from moving them to bonds or notice accounts. National Savings & Investments (NS&I) – which are government guaranteed – could offer consistently more interest than many of the banks or building societies.

Taking control of your finances can set you on the path to financial freedom. Our aim is to ensure all clients enjoy the freedom that comes in knowing your finances are properly structured and well managed. To discuss your own circumstances please contact your nearest office.

David Pugh, Chief Strategy and Commercial Officer

This entry was posted on Monday, 15th June 2020 at 11:26 am and is filed under Capital Gains Tax, Estate Planning, Financial Planning, Inheritance Tax, Investments, News, Pensions, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed.

Tags: financial planning, inheritance tax, UK pension