We all want to ensure our loved ones can enjoy the best life possible, and your legacy can help them live happily long after you’re gone. Russell Brett explains how you can protect your assets for the next generation.

Safeguarding your assets requires careful planning and strategic decision-making – not just for your own personal enjoyment of assets now, but also to preserve them for future generations. 

With more options than ever before, the sheer choice of legacy planning can be overwhelming, particularly if your goal is to leave your loved ones as much money as possible. Here’s an at-a-glance guide on how UK investors can protect their hard-earned wealth for the benefit of their families down the line…

Draft a comprehensive Will

One of the most important steps in estate planning is to create a legally binding Will. A Will ensures that your assets are distributed according to your wishes after you die. Without this legal safeguard, the distribution of your estate may be subject to intestacy rules, which might not align with your preferences. 

If you already have a Will in place, ensure that it is regularly reviewed and updated to reflect any changes in your financial situation or family circumstances.

Make use of your Allowable Gifts

In the UK, certain gifts are exempt from inheritance tax (IHT) if made during your lifetime. These include annual exemptions, small gifts, wedding gifts, and gifts to charities. By taking advantage of these allowances, you can reduce the taxable value of your estate while also providing financial support to your loved ones.

Transferring assets, such as property, to your heirs during your lifetime can be an effective strategy for reducing inheritance tax liabilities. However, it’s essential to consider the implications carefully, as gifts may be subject to potential capital gains tax and other levy considerations. Seeking professional advice can help ensure that your gifting strategy aligns with your overall estate planning goals while minimising your tax liabilities.

Employ the strategic use of trusts

Trusts are powerful tools for asset protection and estate planning. They allow you to transfer assets to trustees who manage them on behalf of your beneficiaries. Trusts can be tailored to your specific needs, whether you want to protect assets from creditors, provide for minors or individuals with special needs, or simply control the timing of distributions. Setting up a trust can help mitigate inheritance tax liabilities and ensure your assets are managed according to your exact wishes.

Carefully navigate inheritance tax liabilities

Inheritance tax is a significant consideration for UK investors looking to pass on their wealth. Currently, estates valued above the nil-rate band (£325,000) are subject to a 40% tax rate although there is the possibility of a further £175,000 exemption available for passing on property to direct descendants. There are also various reliefs and exemptions available that can help reduce the impact of IHT, such as business relief and agricultural relief. By carefully structuring your estate and taking advantage of available reliefs, you can minimise the tax burden on your beneficiaries.

Protecting your wealth for future generations requires proactive planning and a thorough understanding of the UK’s tax and estate laws. By carefully following the above steps, UK investors can ensure that their hard-earned assets are preserved and passed on to their loved ones in the most tax-efficient manner possible. 

Remember, seeking advice from financial professionals is crucial to developing a robust estate plan tailored to your unique circumstances. Get in touch with our expert team today to discuss how we can best protect your assets.