master-admin, Author at Investing For Tomorrow

Investing For Tomorrow was proud to sponsor Overgate Hospice’s recent sporting dinner fundraiser with footballing and broadcasting legend Harry Redknapp.

And it was truly a night to remember! From start to finish, the energy in the room was electric and the event raised an incredible £128,590 – a record-breaking total that marks the most that Overgate Hospice ever raised at a single event.

Overgate Hospice provides expert care and support for people in Calderdale who have a terminal illness or a long term condition that cannot be cured. Every day they need to raise thousands of pounds to keep the hospice running, and we’re proud that Investing For Tomorrow have a long history of supporting Overgate’s much-needed work.

You can see more images from the night on Overgate’s Facebook page here.

Photos by Danny Thompson Commercial Photography.

Additionally, Business Property Relief (BPR) will be restricted to 50% for all shares designated as ‘not listed’ on a recognised stock exchange, such as AIM, from April 2026. One such tool that is receiving attention is whole-of-life cover. In addition to being a standard life insurance product, it offers unique benefits that can help individuals protect their legacies while addressing IHT concerns.

What is whole-of-life cover?

Whole-of-life is a life assurance product designed to provide peace of mind. Unlike term life insurance, which only offers cover for a fixed period, whole-of-life cover guarantees a payout whenever the policyholder passes away – whether that’s next year or decades into the future.
This means the policy lasts for the entirety of your life, ensuring that your beneficiaries, such as your children or loved ones, will receive the agreed-upon payout. This reliability makes whole-of-life cover particularly valuable for estate planning purposes, especially when considering tax liabilities.

Managing IHT liabilities with whole-of-life cover

Inheritance Tax is charged at 40% on estates valued above the IHT threshold, currently set at £325,000 in the UK, extended to 2030. This figure often includes the value of your home, savings and investments, making it easy for estates to exceed the threshold and incur significant tax liabilities.

A whole-of-life cover policy can be set up within a trust, which is particularly advantageous when tackling IHT. The payout remains outside your estate if the policy is placed in an appropriate trust. This means beneficiaries can use these funds to settle any IHT obligations without dipping into their inheritance or liquidating other assets. This strategic structure helps maintain the integrity of the estate while easing financial burdens.

Life expectancy must be considered

When determining the appropriateness of whole-of-life cover, several factors come into play. These include your age, health, lifestyle and the size of your estate. Most importantly, life expectancy must be considered – policies are most cost-effective when individuals live significantly beyond the average life expectancy, as this spreads premiums across many years.

Choosing whole-of-life cover isn’t a decision to be taken lightly. It’s essential to assess whether the policy’s benefits outweigh its costs. For example, if your IHT liability is substantial due to owning high-value assets or property, whole-of-life cover can be a crucial part of your financial strategy.

Similarly, you’ll need to weigh the premiums against your budget and personal circumstances.

Stability amid uncertainty

One of the most compelling benefits of whole-of-life cover is its stability. We live in an era of fluctuating taxation policies, and future budgets
could bring changes to IHT thresholds or rates. However, a whole-of-life policy isn’t influenced by such adjustments, offering a dependable safeguard for your estate.

This future-proof nature ensures your loved ones won’t face unexpected financial burdens, even in an evolving tax landscape. It’s an effective tool for preserving your legacy without worrying about political or economic developments.

THIS ARTICLE DOES NOT CONSTITUTE TAX, LEGAL OR FINANCIAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

THE TAX TREATMENT IS DEPENDENT ON INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN FUTURE.

Over time, this balance helps smooth returns and provides greater stability, whether markets are thriving or facing challenges. However, diversification alone isn’t enough to create a truly effective portfolio. Your investment strategy must be tailored to your unique circumstances, personal goals and financial timeline.

Setting clear goals and evaluating risk

Before constructing any investment portfolio, you need to consider your financial goals and your attitude toward risk. Are you saving for a long-term objective, such as retirement, or do you need to access your funds within the next few years? Generally, the longer your time horizon, the more risk you can afford to take. This is because long-term investments have the potential to recover from short-term market dips.

Given their lower risk, safer investments like cash or fixed-interest assets often take precedence for those near or in retirement. On the other hand, younger investors with decades ahead might gravitate toward equities, which, while riskier, often yield higher returns over time. Always ensure your risk comfort level reflects your investment choices to avoid undue stress and potential financial hardship.

Achieving balance through asset allocation

A balanced investment portfolio spreads money across multiple asset classes, such as cash, fixed interest (corporate bonds or gilts) and equities. This strategy not only diversifies your portfolio but provides a safeguard against economic fluctuations. Some asset classes are ‘negatively correlated’, meaning they react differently during economic or market shocks. For instance, if equities underperform, fixed-interest investments or cash holdings may compensate, smoothing your overall return.

Taking diversification to the next level involves including international exposure and investing in various industries. This way, if one sector or region experiences difficulties, others might help offset potential losses. Remember, diversification doesn’t eliminate risk entirely, but it significantly increases your portfolio’s resilience.

Exploring broader income opportunities

Diversification remains vital for those reliant on their portfolios to generate income. While fixed-interest investments have historically been the go-to for income investors, other options are worth exploring. Property, infrastructure and certain private equity firms are examples of alternative income sources. These options may not promise guaranteed returns but can complement traditional strategies to deliver stable income streams over time.

Investors seeking returns should also consider market trends. For example, equities have significantly outperformed cash over longer periods. Balancing historical trends with financial objectives ensures your money works as effectively as possible.

Proactive management and regular rebalancing

Creating a robust portfolio is not a one-and-done task – it requires ongoing management. Market conditions shift, altering the value of assets within your portfolio. Over time, this can cause your investment allocations to drift from your intended strategy, exposing you to risks outside your comfort zone.

A key part of long-term investment success is rebalancing – the act of realigning your portfolio to restore its original diversification and risk level. For example, if equities grow significantly, your portfolio might become too equity-heavy, necessitating a move back into fixed-income or other safer assets. Rebalancing ensures your financial plan continues to reflect your long-term goals and risk tolerance.

Obtaining professional financial advice

Despite the benefits, constructing and maintaining a diversified investment portfolio can feel overwhelming due to the complexity of financial markets and the wide range of investment options. This is where professional financial advice proves indispensable. We can help tailor a portfolio that suits your unique needs, whether your priority is growing wealth for the future or generating reliable income today.

We’ll also ease the burden of rebalancing, ensuring your portfolio adapts to changing financial landscapes so you gain confidence that your money works as effectively as possible without exposing you to unnecessary risks.

THIS ARTICLE DOES NOT CONSTITUTE TAX, LEGAL OR FINANCIAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

THE VALUE OF YOUR INVESTMENTS CAN GO DOWN AS WELL AS UP, AND YOU MAY GET BACK LESS THAN YOU INVESTED.

THE TAX TREATMENT IS DEPENDENT ON INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN FUTURE.

Taking a detailed and strategic approach to wealth planning is essential, particularly with complex tax alterations on the horizon. Here, we break down the key areas of the Autumn Budget for 2024 and explain how these changes might affect pensions, Inheritance Tax (IHT), Capital Gains Tax (CGT) and investments.

Pensions and long-term wealth strategies

One of the most direct and impactful changes involves the proposed inclusion of pensions within the IHT framework from 6 April 2027. This adjustment means that individuals who historically viewed pensions as an efficient IHT planning tool may need to reconsider their approach. The consultation period for this proposal ends in January 2025, leaving some time for further clarity; however, proactive planning will be crucial in the interim.

Pensions have long been subject to fluctuating tax regulations. For instance, in 2006, a 35% tax on death benefits after age 75 eligible for agricultural relief led to advice that clients preserve their pensions and draw from other assets instead. Similarly, adjustments in subsequent years prompted shifts in planning strategies, including a shift away from pensions when a 55% tax rate was introduced. These changes highlight the importance of maintaining flexibility in wealth planning, as adapting quickly to legislative changes can mitigate potential losses.

Reviewing alternatives for IHT planning

Pensions could become less valuable tools for IHT mitigation, so it may be time to explore other strategies. Options such as gifting excess income, funding a whole-of-life insurance policy or establishing trusts could be viable alternatives. Each approach has benefits and limitations, which must be tailored to individual needs.

The changes announced to Inheritance Tax extend beyond pensions, with particular focus on business and agricultural relief. Historically, business assets were often assumed to sit outside the estate for IHT purposes, but new measures set to take effect by April 2026 could alter this dramatically. Business owners may consider transferring assets to discretionary trusts during this planning window to minimise future IHT implications.

Business assets under the microscope

Changes to business property relief could reshape estate planning strategies for entrepreneurs and investors with significant business holdings. Thanks to 100% relief, business property has historically been immune to certain forms of IHT; however, the government now proposes reducing this relief to 50% on assets exceeding £1m. While this change aims to close perceived loopholes, it could affect decisions about reinvesting in or divesting business assets.

Similar considerations now apply to the Alternative Investment Market (AIM) shares, which have traditionally benefited from the same relief. While the reduction to 50% relief is less severe than the complete removal that some had feared, it introduces new uncertainties. AIM-listed companies may see a reduced attractiveness as part of strategic IHT planning. That said, AIM shares can still play a critical role in tax efficiencies within ISAs, especially for those willing to tolerate higher market risks.

Agricultural relief and the impact on farming families

Another substantial reform impacts agricultural relief, traditionally designed to safeguard farmers’ estates from significant tax bills. Under the new measures, farmland and related assets above £1m will be eligible for only 50% relief, which could result in a 20% IHT rate for higher-value estates. While the legislation offers flexibility to spread tax payments over a decade, the immediate impact on cash flow and succession planning could be profound.

For many farmers, including the next generation inheriting these estates, this change underscores the need for careful financial planning to prevent future hardship. The complexities of combining agricultural assets with other allowances, such as the residential property nil rate band, make tailored advice essential.

Adjusting strategies for Capital Gains Tax

Capital Gains Tax (CGT) is also in the spotlight, with a revised rate of 18% and 24% likely to impact investors’ behaviour. While less onerous than the previous 28% rate applicable to properties, the slight decrease may not be enough to alter transaction trends dramatically. Crucially, unlike other taxes, CGT allows for greater oversight over decisions, such as when to sell assets.

For those sitting on significant gains, deferral options like the Enterprise Investment Scheme (EIS) remain available. However, some may prefer to pay the tax now rather than risk a higher future rate in the current environment. Planning for CGT becomes even more important when balancing other tax considerations and wealth goals.

Considering non-dom status versus other strategies

For individuals seeking to escape the UK tax net, non-domicile status might appear attractive theoretically but is fraught with complexities in practice. While Income Tax can often be avoided relatively quickly by moving abroad, full detachment from the IHT framework takes years. This leaves many questioning whether waiting for ten years outside the tax net is worth the effort.

Alternatively, gifting significant portions of wealth now can be a simpler and more immediate way to sidestep long-term IHT liabilities. Some clients are increasingly exploring philanthropy or intergenerational financial gifting to manage their estates while also creating a meaningful legacy.

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

Often dubbed the ‘Bank of Family,’ it is anticipated to be pivotal in 42% of UK property purchases for those under 55 in the coming year[1]. This translates to an impressive 335,000 housing transactions in 2024 alone, marking the highest level of family-supported purchases since tracking began in 2016.

Supporting the next generation

The financial help extended by family members is predicted to rise significantly, with gifts from parents and grandparents expected to reach £11.3 billion by 2026. To fund these generous contributions, many are opting to downsize their homes, release equity, or re-mortgage their properties. Specifically, 19% of those providing financial support are doing so through these avenues, with 9% utilising equity release in the first half of this year alone.

Despite the good intentions behind these financial gifts, there is an alarming trend of not seeking professional advice. 74% of parents and grandparents who made a financial gift did not obtain professional advice before proceeding, which could have long-term financial implications.

Value of professional advice

Property wealth remains one of the most significant assets for families across the UK, making it a natural resource for financial support. However, individuals making substantial financial gifts should seek professional advice to ensure they are making informed decisions. While products such as lifetime mortgages automatically include specialist advice, this is only sometimes the case for other financial gifts, which can lead to unanticipated financial strain.

As equity release becomes more mainstream, more people may consider it a viable option for supporting their loved ones. The ‘Bank of Family’ is set to have a busier year than ever, and with this comes the need for prudence and careful planning. The ‘Bank of Family’ is becoming a significant player in the UK housing market, supporting an ever-growing number of property transactions.

Source data:
[1] Bank of Family methodology research was compiled using primary survey data as well as existing data sources relating to the housing market. Survey work carried out by YouGov – the total sample size 2,017 adults aged 55+ with children or grandchildren aged 16+ – survey undertaken between 26th June and 2nd July 2024.

What is Inheritance Tax (IHT)?

IHT is a tax levied on the transfer of wealth, typically paid by the estate of a deceased individual, but it can also apply during a person’s lifetime. Your estate includes all property, possessions, money, and other assets. If the value of your estate exceeds the nil-rate band at the time of death, the excess is subject to IHT, generally at 40%. IHT is usually not applicable if everything is left to a spouse or registered civil partner. For the 2024/25 tax year, the IHT nil-rate band is set at £325,000.

Maximising IHT allowances

Married couples and registered civil partners have the option to transfer any unused portion of their IHT nil-rate band to the surviving partner, effectively doubling the threshold to £650,000. In addition, the ‘residence nil-rate band’ introduced in 2017 can increase an individual’s IHT allowance if their main residence is passed on to direct descendants. This can potentially raise the overall IHT allowance to £500,000 per individual or £1 million per couple.

Strategic planning to reduce IHT

The residence nil-rate band gradually diminishes by £1 for every £2 that the estate exceeds £2 million, becoming unavailable for estates valued over £2.35 million. An up-to-date Will is crucial to effectively manage IHT liabilities, as older Wills may contain trusts that impact the nil-rate bands. Some individuals may postpone wealth transfer until death, but gifting during their lifetime can be more tax-efficient.

Tax-efficient gifting and transfers

Tax-efficient gifts (tax year 2024/25) currently include annual exemptions of £3,000, wedding or registered civil partnership gifts up to £5,000 for a child, £2,500 for a grandchild, or £1,000 for others, and gifts from regular income. Small gifts of up to £250 per person annually are also exempt, provided no other allowances are used for that individual. Gifts not covered by exemptions are either ‘potentially exempt transfers,’ which require surviving seven years to be tax-free, or ‘chargeable lifetime transfers,’ which may incur immediate IHT.

Utilising pensions for IHT efficiency

Pensions can also facilitate tax-efficient wealth transfer. Should you pass away before age 75, benefits left in a money purchase pension can generally be transferred tax-free. If death occurs post-75, these benefits are taxed at the beneficiary’s marginal Income Tax rate. It may be prudent to draw retirement income from other sources, preserving pension funds for inheritance purposes.

Additional strategies for reducing IHT

Other IHT reduction methods include establishing trusts, exploring specialist investment vehicles, and considering whole-of-life insurance policies written into an appropriate trust. However, the intricacies of these options highlight the importance of seeking professional financial advice early on. Early planning significantly enhances the ability to leave a legacy that meets your family’s specific needs.

Source data:
[1] https://www.gov.uk/government/statistics/inheritance-tax-statistics-table-121-analysis-of-receipts
[2] https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk/hmrc-tax-receipts-and-national-insurance-contributions-for-the-uk-new-annual-bulletin#inheritance-tax

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.
THE VALUE OF YOUR INVESTMENTS CAN GO DOWN AS WELL AS UP, AND YOU MAY GET BACK LESS THAN YOU INVESTED.

THE TAX TREATMENT IS DEPENDENT ON
INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN FUTURE.

THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE TAX AND TRUST ADVICE AND WILL WRITING.

The gender pension gap is not merely a consequence of individual choices but a complex issue influenced by societal norms and work patterns. Women are more likely to engage in part-time work or take career breaks to manage caregiving responsibilities, directly affecting their earnings and, consequently, their pension savings. Despite similar participation rates in pension schemes, the amount saved by women lags significantly behind that of men.

Factors contributing to the gender gap

Despite similar pension scheme participation rates, women save less than men throughout their careers. This discrepancy is stark, with a 16% gap in their 30s widening to 43% by the age of 55, the research highlights[1].

Historical perceptions painted women as less likely to engage with pensions, but recent findings contradict this, showing women value pensions highly when considering job offers[2]. However, many women take lower-paid, part-time roles to balance work with caregiving responsibilities. In fact, about one million women under 50 are outside the workforce due to such commitments[3].

Impact of caregiving responsibilities

Care responsibilities, often shouldered by women, significantly affect their retirement savings. Statistics from the Office for National Statistics reveal that older female workers are twice as likely to have caregiving duties, which detracts from their ability to save for retirement[4].
While two-fifths of workers enhance their pension savings through employer matching, fewer women than men take advantage of this opportunity. Affordability is a common barrier, with half of the women citing it as a reason compared to 39% of men.

Addressing the savings disparity

Auto-enrolment has boosted savings among women, yet the interruptions caused by parenthood and caregiving continue to affect their pay, career advancement, and, ultimately, their pension savings. Decisions to reduce work hours for family care have long-term financial implications.
While men and women save similarly for pensions early in their careers, the gap widens significantly with time, culminating in women having roughly £60 for every £100 saved by men at retirement. Compounding this, women typically live longer, necessitating more substantial savings for a more extended retirement period.

Empowering women in financial planning

Dispelling the myth that women are less interested in pensions is crucial, as many are now more empowered and proactive in managing their long-term finances. Starting to save early is vital for overcoming gender-specific barriers. Establishing a retirement fund as soon as possible allows small contributions to grow over time. Regularly reviewing pension savings is also essential, ensuring alignment with retirement goals.

Consider increasing pension contributions when receiving a pay rise, especially if employer matching is available. This can significantly amplify retirement savings. Planning for retirement involves more than just financial considerations; it requires envisioning how you wish to spend your time post-retirement. Whether enjoying leisure activities or travelling, understanding these desires helps estimate retirement costs more accurately.

Collaborative planning for couples

If you are part of a couple, joint planning is beneficial. Contributing to each other’s pensions and maximising State Pension entitlements ensures both of you can enjoy a comfortable retirement. Managing pensions can seem complex, but we can provide guidance. We can help demystify pension schemes and build confidence in handling your retirement savings.

Source data:
[1] Royal London’s research is based on nearly two million workplace employees, with a 41% female and 59% male split—data at the end of H1 2024.
[2] The research was conducted between 31 July and 5 August 2024, and 3,693 UK workers had workplace pensions.
[3] https://www.bbc.co.uk/news/business-52660591
[4] https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/ageing/articles/ living longer howourpopulationischangingand whyitmatters/2019-03-15

NHS Continuing Health Care (CHC) might cover some or all expenses, but securing this funding can be complex and challenging, especially during stressful times. Despite it seeming evident that certain conditions, such as dementia, require medical care, they are often classified as social care, which typically falls outside NHS funding.

Navigating NHS funding challenges

If NHS funding isn’t an option, you can explore alternatives, often involving personal financial contributions. The rules for providing long-term care are complex, and different rules apply in England and Northern Ireland, Scotland and Wales.

In England you’ll currently undergo a means test. If your assets exceed £23,250, you’ll need to cover the full cost of your care. With assets between the £14,250 and £23,250 tariff limit, the local authority may contribute, but you’ll still be responsible for a portion of the costs. Your income is still considered if your assets are below £14,250, but capital is excluded from means testing, and the local authority pays for your care.

In Scotland, the upper limit is over £35,000, and you’ll need to pay the full cost of your care. The local authority funds some of the care between the £21,500 and £35,000 tariff limit, and you pay the rest. The lower limit is less than £21,500, capital is excluded from the means test, and the local authority pays for your care. However, your income is still taken into account.

In Wales, the single limit is £50,000 and over. Above this figure, you pay the full cost of your care.

Capital amounts between the upper and lower limits tariff for England and Northern Ireland, and Scotland are assessed as providing £1 of additional income for every £250 of capital above the lower limit. The tariff income is then added to your other income for the income means test.

Understanding asset implications

A common misconception is that selling your home is mandatory to fund care costs. This isn’t necessarily true; if you or close family members live in your home, it’s generally safeguarded from being counted in your financial assessment.

However, an empty property, such as moving into a care home, might be considered part of your assets, potentially necessitating its sale to cover costs. Gifting assets to avoid care expenses can also be problematic. Local authorities might view this as a ‘deliberate deprivation of assets,’ which can complicate financial assessments significantly, especially if done during a time when care costs are foreseeable.

Planning for an uncertain future

The unpredictability of needing long-term care makes it essential to start planning early. While it’s impossible to predict the exact costs or duration of care, cash flow modelling can provide insight into how prepared you are for such expenses. Government policies may change, but assuming ‘no change’ and preparing accordingly is prudent. Exploring different solutions now can alleviate future burdens.

Exploring financial options

Long-term care planning is one of the most challenging areas to address, with many in denial about their potential needs. However, taking proactive steps can ensure you or your loved ones receive the care required without financial hardship. From insurance products to savings strategies, numerous options can be tailored to your circumstances to provide peace of mind.

One of the primary benefits of placing a life insurance policy in Trust is bypassing the often lengthy probate process. When a policy is written in Trust, the payout can be made directly to the beneficiaries without the need for probate. This means that funds are accessible much more quickly, providing timely financial support to your loved ones when they need it most.

Tax-efficiency advantages

Another significant advantage is the potential for tax efficiency. Trusts can help avoid or reduce Inheritance Tax on the payout, ensuring that a greater portion of the policy’s value reaches your beneficiaries instead of being lost to taxes. This can make a substantial difference in the financial well-being of your dependents.

Control over distribution

Trusts also offer enhanced control over how and when the proceeds are distributed. With a Discretionary Trust, for example, you can specify the terms of distribution, allowing the Trustees discretion in determining the timing and allocation of funds. This ensures that your intentions are honoured and provides a mechanism to support beneficiaries according to their specific needs.

Protection from creditors

Assets held within a Trust are generally protected from creditors, safeguarding the financial security of your dependents from external claims. This protection ensures that the payout is more likely to reach your intended beneficiaries without being diverted to settle outstanding debts.

Flexibility and adaptability

Trusts provide a flexible and adaptable solution for managing life insurance policies. They can be tailored to meet your specific needs and adjusted as circumstances change, ensuring that your financial planning remains robust and relevant over time. This flexibility makes Trusts a valuable component of any comprehensive financial strategy.

Ensuring financial security

Writing your life insurance policy in an appropriate Trust is a strategic decision that can significantly enhance the financial security and efficiency of the payout for your beneficiaries. By taking this step, you can ensure that your loved ones receive the maximum benefit from your policy in a timely manner, free from unnecessary delays and tax burdens.

Choosing the right Trust for your life insurance

Options available, each with distinct features and benefits.

Discretionary Trusts;

In a Discretionary Trust, your trustees are granted a high level of discretion concerning which beneficiaries receive the payout and when. This flexibility allows trustees to make decisions based on your letter of wishes, which guides them in administering the trust according to your intentions.

Flexible Trusts;

A Flexible Trust includes both default and discretionary beneficiaries. Default beneficiaries are entitled to any income generated by the trust, though life insurance policies typically do not produce income. Discretionary beneficiaries, on the other hand, receive capital or income only if the trustees choose to allocate it during the trust period. If no distributions are made, default beneficiaries will ultimately receive the benefits.

Survivor’s Discretionary Trusts;

This type of trust is designed for joint life insurance policies, paying out to the surviving policy owner. For instance, if you pass away before your partner, they would inherit the policy. If both policyholders die within 30 days of each other, the beneficiaries can access the funds as per a standard Discretionary Trust.

Absolute Trusts;

An Absolute Trust names specific beneficiaries who cannot be changed, even if circumstances such as new births or divorce occur. This trust type ensures quick payouts without lengthy legal delays and typically offers favourable Inheritance Tax implications.

Aligning with your long-term financial goals

While placing life insurance in an appropriate Trust offers numerous advantages, it’s crucial to weigh these benefits against potential downsides. Understanding the implications can help you make an informed decision that aligns with your long-term financial goals.

Irreversibility of the decision

One of the most significant aspects of placing a life insurance policy in Trust is the irrevocable nature of the decision. Once the policy is committed to a Trust, it cannot be withdrawn or reversed. This permanence means that individuals must be absolutely certain of their choice, as changing circumstances cannot alter the trust once established. The irrevocability demands thorough consideration and foresight, ensuring the decision fits your plans and intentions.

Loss of personal control

Another consideration is the relinquishment of control over the life insurance policy. Once in a Trust, any decisions regarding the policy must be approved by the appointed Trustees. This can be particularly challenging for individuals accustomed to managing their financial affairs independently. The need for Trustee approval can introduce complexities and delays, especially if the trustees have differing views or interpretations of the Trust’s intentions.

Duration and flexibility of Trusts

Trusts are designed to be long-term arrangements. Technically, a trust can last up to 125 years, especially if established for charitable purposes. However, the duration of a Trust is typically tailored to fit personal circumstances. For example, a trust might be set to last until a child reaches a certain age or milestone, such as marriage. This long-term nature requires careful planning to ensure the trust remains relevant and effective throughout its lifespan.

While the benefits of life insurance trusts, such as tax efficiency and protection against probate, are enticing, it’s essential to consider these potential drawbacks seriously. The irrevocable nature and loss of control may not suit everyone’s situation, particularly if future flexibility is a priority.

THE FINANCIAL CONDUCT AUTHORITY DO NOT
REGULATE TAX PLANNING.

Regular financial planning is key to assessing your current situation, identifying potential financial gaps, and taking measures to bridge them before it’s too late. Should you find yourself lacking the time or expertise to navigate this journey alone, the insight of a professional financial adviser could prove invaluable in crafting your ideal retirement plan.

Understand your unique needs

The transition from a working lifestyle to retirement brings significant changes. You will no longer receive a monthly salary or face the daily commute. You might have paid off your mortgage, freeing up time and resources for leisure. Yet, with more time on your hands, the costs associated with leisure activities might increase, and inflation remains a constant factor to consider. Recent upheavals, such as surging energy prices, have highlighted how external shocks can disrupt even the best-laid plans.

Consider long-term financial scenarios

As you age, the potential for long-term care costs becomes more apparent and essential to include in your financial planning. A robust plan encapsulates your aspirations, anticipates potential hurdles, and prioritises your retirement necessities. Cash flow planning provides a solid foundation for broader financial strategies, allowing you to stress-test various scenarios like fluctuating living costs, inflation, investment growth, and interest rate changes.

Adapt your retirement planning strategy

Retirement planning requires flexibility and periodic reviews to accommodate personal and external changes. There’s no universal strategy for retirement; what works for one person might not suit another. It’s crucial to contemplate your required income, desired activities, and the degree of risk you’re willing to accept. An annuity offering a guaranteed lifetime income might be ideal for those adverse to investment risks. Conversely, a drawdown approach could be more suitable if you prefer flexibility and can tolerate some level of investment risk. Often, a blend of both may serve your needs best.

Seek expertise for tailored solutions

Professional financial advice can tailor a bespoke plan that remains adaptable over time, ensuring it meets your evolving goals. Retirement is a significant life stage demanding careful consideration. Financial advisers can assist in identifying and prioritising your objectives, assessing your risk tolerance, and formulating a long-term strategy that aligns with your goals. Regular reviews are crucial to keep your plans aligned with your objectives.

Keep reviewing your financial plan

Regular reviews are essential even if you have a solid financial plan in place. Life changes, aspirations shift, and external factors like the financial climate evolve and will influence your retirement strategy. Ensuring your plan remains current and relevant is vital to your financial success. With numerous options available today, it may be overwhelming, yet a comprehensive financial review can help identify the most appropriate path for you.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.

call: 01422 349 131

email: info@iftwm.com

What is whole-of-life cover?

Managing IHT liabilities with whole-of-life cover

Life expectancy must be considered

Stability amid uncertainty

Setting clear goals and evaluating risk

Achieving balance through asset allocation

Exploring broader income opportunities

Proactive management and regular rebalancing

Obtaining professional financial advice

Pensions and long-term wealth strategies

Reviewing alternatives for IHT planning

Business assets under the microscope

Agricultural relief and the impact on farming families

Adjusting strategies for Capital Gains Tax

Considering non-dom status versus other strategies

Supporting the next generation

Value of professional advice

What is Inheritance Tax (IHT)?

Maximising IHT allowances

Strategic planning to reduce IHT

Tax-efficient gifting and transfers

Utilising pensions for IHT efficiency

Additional strategies for reducing IHT

Factors contributing to the gender gap

Impact of caregiving responsibilities

Addressing the savings disparity

Empowering women in financial planning

Collaborative planning for couples

Navigating NHS funding challenges

Understanding asset implications

Planning for an uncertain future

Exploring financial options

Tax-efficiency advantages

Control over distribution

Protection from creditors

Flexibility and adaptability

Ensuring financial security

Choosing the right Trust for your life insurance

Aligning with your long-term financial goals

Irreversibility of the decision

Loss of personal control

Duration and flexibility of Trusts

Understand your unique needs

Consider long-term financial scenarios

Adapt your retirement planning strategy

Seek expertise for tailored solutions

Keep reviewing your financial plan

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call us: 01422 349 131

email us: info@iftwm.com