UK News: Future-proofing your family’s wealth

Safeguarding the current and future lifestyle of you and your loved ones isn’t simply a matter of wise investment. Planning for the future means asking some big questions about where you are now and where you want to be.

So, how do you chart a course towards a more certain future for yourself and your family?

1. Go back to basics

Before getting into the details of your assets, liabilities, income and outgoings you need to remind yourself what you want to achieve and what's important to you. It's about articulating your personal goals. For example, do you want to retire in five years' time? Do you want to move abroad? Is there a personal project you'd love to focus on? When you're clear about your aspirations – for your family as well as yourself – can you start to plan how to achieve them, always bearing in mind the 'winds of change' that might blow you off course.

2. Know your worth

Cash-flow may not currently be an issue for you, but prepare yourself. Many wealthier families are surprised when they take a closer look at how much they spend. Be thorough when analysing the net value of your estate (the total assets less total liabilities) and your net cash-flow (income less outgoings). Don't kid yourself!

A balance sheet and profit and loss account is standard practice in business but less so for individuals and their personal finances. However, it's key to giving you a complete picture of how much you and your family need now and in the future to maintain your lifestyle.

3. Think about the unthinkable

While it's impossible to plan for every eventuality, there are some scenarios you need to consider to ensure your plans aren't completely derailed. These are the hard questions to face. How will your family fare if you're not around? What happens if your company fails or you lose your livelihood?

You need to weigh up insurance options – not just to give yourself and your family basic reassurance, but to ensure their standard of living can be maintained. Think about medical insurance, income replacement and life assurance for you and your spouse.

The other fundamental consideration here is your Will. Dying intestate (without a Will) leaves a financial and administrative burden for the family. Your Will should be as up to date as possible and relevant to your present asset position. Life events – marriage, children, grandchildren, business acquisition/disposal – should be a trigger to make or revise your Will. Too often Wills get overlooked.

4. Don't put off the IHT question

There is no escaping death or taxes. Inheritance Tax (IHT) planning can certainly mitigate some of the burden on your loved ones. Particularly, given the rate of tax is set at 40 per cent an estate above GBP325,000 on death.

Making significant lifetime gifts and surviving seven years from the date of the gift is perhaps the easiest route to lowering the IHT bill. However, you need to be clear on how much you can afford to give away without affecting your current standard of living and without 'spoiling' your children/grandchildren.

There are wider questions, too – including family politics and treating your loved ones fairly. You may also have philanthropic intentions for some of your assets, perhaps setting up a foundation or charitable trust in your lifetime or on your death.

Estate planning demands expert guidance, which leads us to point five.

5. Be smart with your specialists

From drafting a Will to creating trusts and from mitigating tax liability to buying overseas property, your plans may be complex and multifaceted.

You may already have a family lawyer, an accountant or tax specialist that advises you. However, you need to be sure that they have the breadth and depth of experience appropriate to your current level of assets and your current needs. You may need a number of professionals to assist you and for their work to be coordinated to achieve your goals.

What your Relationship Manager can do is engage with specialists within HSBC Private Bank with the knowledge and experience to help you. You'll then have a team that understands your goals and knows how to help you plan to achieve them.

Speak to your Relationship Manager if you're interested in structuring your wealth for the future.

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Risk warning

It is important to note that the capital value of, and income from, any investment may go down as well as up and you may not get back the full amount invested.

Important information

This material is issued by HSBC Private Bank (UK) Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the UK. It has been issued for your information purposes only.

Please note that HSBC does not provide tax advice and clients should seek professional advice from their tax advisor. Any reference to tax is based on our knowledge of the current and proposed tax regime and is subject to change.

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