A proper wealth plan is the best gift for your family

A wealth plan should look at all aspects – direct and indirect – of your financial affairs, and it should consider you and your family.

It’s a plan that assesses your financial fitness, and one that helps you achieve your dreams and goals.

And most importantly, a wealth plan ensures the best outcomes for you and for the generations above and below you. In this article, we’ll outline some of the aspects that will ensure it supports you throughout your and your family’s financial journey.

Make sure you’re doing it right

It’s important to understand what to expect your wealth plan to do for you. It should look like a plan that contains realistic steps about helping you achieve your financial goals.

It should encompass a Lifetime Wealth Model based on a professional cashflow model, a tax optimisation strategy, a holistic family office service, all of which supported by industry-leading investment management services.

So whenever you think about a wealth plan, consider the components of managing, growing, preserving and distributing your wealth.

Here are some aspects of a wealth plan to look for:

• It represents an accurate picture of your financial circumstances, supported by a Lifetime Wealth Model
• It employs a strategy that ensures long-term financial success
• It is multigenerational
• Estate planning is one of the most crucial parts of building generational wealth, as it outlines how your assets are managed
• It leverages the most tax-efficient strategies.

Another important part of building a plan is to reassess it from time to time, to ensure it is up to date and reflects your needs and wishes.

If you’re not sure what your wealth plan could look like, get in touch with a financial adviser.

Protect your wealth, involve your family

If any member of your family is included in your wealth plan – as part of any planning, inheritance, power of attorney, wills, or any other elements of succession planning – it is imperative you keep an open, frequent dialogue with them.

There are many reasons to be open about your wealth plan, one of which is the reassurance that they understand your expectations around their involvement.

We often hear about people disagreeing over financial decisions made as part of an inheritance, sometimes creating permanent division.

The most effective way to avoid this outcome is to talk to your family about your wealth. Tell them how you would like it to be managed when you’re no longer able to make your decisions about it. Communicate to your family your preferences, and help them understand the reasons for your decisions.

In fact, helping your family understand money/wealth matters is easier the sooner you do it. So if you can, I would strongly encourage you to talk to partners, children and grandchildren about money.

Wealth does not have to be a taboo. If you’re reticent that you’d like to talk about your finances with your family, there are ways you can share your views.

Make sure your loved ones have a good understanding of:

• The importance of saving money
• Day-to-day spending and budgeting
• The fundamentals of other financial products like loans, credit cards, mortgages, insurance
• Planning for retirement in the long term: considering pensions and other available tax-friendly tools
• Good debt vs bad debt – student debt compared with high-interest credit card debt

Communicating these concepts should enable your family to make sensible financial decisions, and their knowledge and skills should suffice as reassurance that your wealth plan is always managed sensibly, regardless of whether you’re the one making the decisions.

Keep your loved ones in the loop

Communicating the importance of sensible financial planning is essential, as is keeping your loved ones abreast of your plans and wishes for the future.

The simplest, easiest way to make sure your wealth plan succeeds is to keep an open dialogue with anyone who is or might be involved in any aspect of your financial journey.

This is the best way to ensure your plan doesn’t contain any surprises that could generate conflicts or doubt over your wishes.

And it works both ways. If someone close to you has a preference over any succession decisions, is there any way you could accommodate such preferences?

Manage your gifts and succession plan

Tax optimisation forms an essential element of your wealth plan, and a reason to revisit a wealth plan from time to time. Tax rules are subject to change, and making sure your plan remains loyal to the most tax-efficient strategies is a key element of a robust plan.

This means that, to ensure the maximum efficiency of your wealth plan, it is useful to regularly update your tax planning strategies. The largest factor to consider here is the tax burden you might be creating for future generations through inefficient tax planning.

There are strategies, such as gifting, that allow an individual to reduce the size of their estate and transfer wealth.

If you’re uncertain about whether you’re using your tax allowances in an optimal way, or if you’d like any assistance implementing a tax-efficient strategy as part of your wealth plan, get in touch with us.

Talk about it

We cannot emphasise this enough. Whatever stage of your life you’re in, talk about money if you can – to family and close friends.

It’s important to listen to other people’s experience and learnings around what they’ve been through; exchanging ideas and experience could help you further shape your views on what you would like your wealth plan to look like.

From there, if you’re yet to build a wealth plan, or would like to change any element, or if you think it might be time to revisit it, talk to our advisers. We’re passionate about listening to individuals, validating their ideas, and turning dreams into robust plans.