We would always recommend making a will to ensure your wishes are carried out should the worst happen. However, you may decide to take things one step further…
Q. In terms of succession planning, what can I do beyond just making a will?
A. The term ‘succession planning’ typically refers to a plan which is devised to manage the transfer of family wealth between generations. It is often put in place by people with large estates who are concerned about inheritance tax and related issues.
Apart from determining who ultimately receives the estate, there are usually three main aims:
1) To ensure the individual making the plan has adequate capital and income to meet their needs for life.
2) To maximise tax efficiency for the benefit of their descendants (or other heirs) on death.
3) To ensure assets are not exposed to unacceptable risk because of the measures taken to implement the plan.
The plan must obviously address what happens to the estate on death and a suitable will is therefore absolutely essential. However, it is often sensible for the suitability of wealth transfers before death to be considered as a part of the process. This should help establish if it is possible to reduce the estate value on death without compromising financial independence and security in life.
If lifetime gifts are appropriate, then consideration should be given to whether they are made directly to individuals or to a trust. A trust is often used to protect against some risks that can arise if large payments are made to individuals i.e. divorce, bankruptcy, irresponsible money management, etc. The suitability of a trust is something that must be considered on a case by case basis.
A plan is best devised by a multi-disciplinary team involving a solicitor, an accountant and an independent financial adviser.
If large irrevocable lifetime gifts are contemplated, the financial adviser should assess whether the proposed gifts may adversely affect the donor’s ability to fund their desired lifestyle before a final decision is made.
They can also consider whether an individual’s investment portfolio can be structured in a more inheritance tax efficient manner – which may avoid the need to make lifetime gifts. The accountant should obviously advise on the tax implications of the plan and the solicitor should put in place the legal documentation to give effect to it.
Want to Learn More?
Whether you’re interested in trusts and lifetime gifts, or simply would like to know more about succession planning, our friendly and experienced wills and probate solicitors are happy to help.
Get in touch with our team to discuss your needs and to learn more about the law today.
