What to consider when planning your legacy

Transferring wealth to the next generation is one of the most important financial decisions you will make in your lifetime. The assets you have carefully built over the years – whether they are property, investments, savings or sentimental items – are a testament to your hard work and dedication. Naturally, you will want to ensure that these assets are preserved, safeguarded and transferred in a manner that benefits your loved ones or chosen beneficiaries.

The way your wealth is transferred will profoundly impact their financial stability and could influence the future of generations. However, managing this transition effectively requires much more than merely deciding who receives what. To create a meaningful and lasting legacy, you must engage in thorough planning.

Key questions to ask before leaving a legacy
Before transferring your wealth, it’s essential to ask yourself some key questions to ensure your legacy aligns with your intentions. Begin by determining how much you will need for the rest of your life, particularly if you want to plan for later-care needs. This ensures that you don’t compromise your financial stability.

Next, consider what you are likely to leave behind. This may include cash, savings, investments, properties, vehicles, business interests or even sentimental items such as jewellery and art. Once you understand your assets, identify who or what you wish to provide for.
Do you want to prioritise family members, make charitable donations or a combination of both? Importantly, you should also consider whether there is anyone you wish to exclude from your legacy.

Fine-tuning your legacy plan
Deciding on the amount each beneficiary should receive is another critical step. Will they all be treated equally, or do you want allocations to reflect individual needs or contributions? Consider, too, whether you prefer to restrict how your wealth is used – for example, earmarking funds for education or homeownership.

Many people also wonder whether to gift wealth during their lifetime. Making lifetime gifts allows you to witness the benefits of your legacy while potentially reducing Inheritance Tax liabilities. Finally, ensure you understand how your wealth will be passed down to future generations so it’s not squandered prematurely.

Preparing the next generation to safeguard wealth
A vital part of effective wealth transfer is preparing your children or other heirs to inherit responsibly. Start by having open conversations about your financial values and the purpose of the wealth they will be receiving. Teaching them about financial management, even in basic terms, can make a big difference in helping them handle significant inheritances.

You might also consider setting up trust structures. Trusts allow you to pass on wealth in a controlled manner. They can also build in protections to ensure your estate continues to benefit future generations while minimising risks such as external claims or financial mismanagement.

Professional advice plays a crucial role
Navigating the complexities of estate planning and wealth transfer is not something you have to face alone. Professional advice plays a crucial role in ensuring everything is structured according to your wishes. We can help you create or revise your Will, set up trusts and explore Inheritance Tax-efficient options to protect your estate.

We can also help analyse the financial repercussions of your decisions by identifying solutions you might not have considered to maximise what’s passed on to those you care about.

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.