There are plenty of times in life when we stop and take stock of our hopes for the future. Whether we’re busy planning for retirement, have a close call or just want to take some time to reflect and re-evaluate, things change and there’s not a lot we can do to prevent that.
Legacy planning is often treated as a bit of a taboo – nobody wants to think about their own mortality. But we plan for so much in our lifetimes that surely we should plan for what happens after we’re gone?
When you’re planning for retirement, it makes sense to think about your future – and that includes considering legacy planning along the way.
Writing a Will
Writing a Will, or keeping an existing one up to date, is a simple way to make sure your wishes are known and that loved ones are provided for.
The latest figures show that two-thirds of people in the UK don’t have a Will and in 2011, the Treasury gained £53 million from those who died intestate (without a Will) and with no traceable next of kin to inherit. Skipton Building Society has a handy infographic that explains what happens if you die without a Will.
Power of Attorney
If you couldn’t make your own decisions anymore due to old age, illness, mental capacity or an accident, would your loved ones know what you wanted? A Power of Attorney is a legal document that places the power to make important decisions, such as those affecting property and financial affairs, as well as health and welfare issues, into the hands of somebody you trust. You can appoint one or more people to become your ‘Attorney’ and make your wishes known to them, giving you peace of mind that they will carry these out on your behalf.
Inheritance Tax Planning
Inheritance Tax may have a real impact on your loved ones, but careful planning with the help of a financial adviser may reduce or even eliminate it completely.
If you’re married (or in a civil partnership), your Inheritance Tax (IHT) threshold is £650,000. If you’re single or divorced, it’s £325,000 (both thresholds are currently frozen until 2018). Above this threshold, IHT is levied at 40%.
Small cash gifts to individuals, donations to your spouse or civil partner, certain charities and other institutions like museums, universities and the National Trust are tax-free and may help reduce any IHT you may owe. It is best to obtain financial advice to assess our options.
For more information about IHT, see the Government’s website.
Will you combine aspects of legacy planning with your retirement planning? Have you experienced the benefits of planning for all eventualities, or the pitfalls of not doing so? We’d love to hear your thoughts so please leave your comments below.
This article has been commissioned by retiresavvy and any opinions voiced are the author's own.
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