A lifetime of planning

“It's not something we really want to think, is it? Getting old, I mean, it's a bit morbid,” said the client to his accountant in answer to some questions about estate planning. “Well, none of us want to address the fact that we are mortal and the result is that estate planning is the most neglected piece of financial planning around,” replied the accountant.

Death and taxes

“There is nothing in life as certain as death and taxes” Benjamin Franklin said. Unfortunately, these days you will quite possibly get both at the same time unless you have planned effectively.

Most people believe that as they own little of value other than their home, inheritance tax is not likely. However, dramatic rises in house prices in the last decade have pushed a higher number of estates into the Inheritance Tax bracket than ever before. You should also remember that the proceeds of insurance policies or amounts in pension funds held on your behalf would also form part of your estate for Inheritance tax purposes. Estates of £500,000 are common and would result in an Inheritance tax bill of almost £100,000.

There are exemptions available though and it is important to take advantage of all of them. Proper advice on what works for tax purposes and what doesn't can often be a crucial factor. For example, advice on the proper use of trusts to utilise both yours and your spouse's exemptions could reduce that inheritance tax bill by £100,000.

Care now and you will be cared for

In the meantime, you may be worried about your own financial independence in later life. No parents will ever want to be a burden to their children if ill health set in, in later life.

Whether 24-hour home nursing care or residential care at a home is required, the Government will no longer pay the bill if a person has assets in excess of £16,000 (which includes property). It is estimated to cost between £350 and £500 per week for care accumulating to over £18,200 per annum.

Over 40,000 homes are sold every year to pay for care. A Long Term Care policy can prevent this by providing the funds to pay for nursing care at home and eventually residential care without reducing savings or selling the family home.

Whatever your circumstances are, a long-term financial plan is highly recommended

We provide the lifetime service in conjunction with Martin Andrews Independent Financial Advisers.