Trustnet Direct Retirement Programme | Page 66

DURING & POST Leaving a legacy You can’t take it with you… It is said there are two things in life you cannot avoid – death and taxes. Yet if you want to leave a legacy for loved ones, a little careful planning can ensure you minimise the tax man’s cut when you finally check out. Once you have taken care of the main business writing a will – what is there left to do? You will probably focus on the big things, such as inheritance tax (IHT) liability on your house. Other major assets – art or classic car collections, for example – may have some tax exemptions, but they all count towards a slice for the tax man. You may have taken out a whole-of-life insurance policy to meet any liabilities and if you’ve been sensible, used gifting rules to pass on some of the ready cash, but what about those investment portfolios? Bare and discretionary trusts offer an excellent and relatively simple method of protecting investments for named individuals. Each have their own wrinkles, but they effectively shelter investments for their beneficiaries. If trusts aren’t for you, consider opening a Junior ISA for your children. They have the same benefits as other ISAs, so no capital gains or income tax liabilities, and you can pay in up to £4,080 (2015/16) a year. When they reach 18, it will convert to a standard adult ISA. Page 66 Don’t forget your pension. The new rules introduced this year allow investors to leave their pension to a loved one after their death. How much tax they pay will depend upon your age and how they access it, but it transforms a pension into a true inheritance planning tool. Making provision is all very sensible, but don’t be too hasty to give everything away. We are all living longer and are likely to spend a lot more of our money keeping us in long term care before we finally say goodbye. Key points A little careful planning can ensure you minimise the tax man’s cut when you die New rules let you leave your pension to a loved one after your death, transforming it into an inheritance. Don’t be too hasty in giving everything away we are all living longer and you may need the money for care costs