When it comes to succession planning, and passing your estate on to the next generation, it is never too early to have your intended beneficiaries involved in the process. By involving your loved ones, and engaging with them, you can help them learn how to manage wealth responsibly and how to govern their expectations for the future.
The logistics of succession planning, such as the methods to pass wealth to your loved ones while avoiding or reducing the effect of Inheritance Tax, are often the primary focus for those interested in this area. However, without the proper education and communication with your beneficiaries, there is a danger that, while the physical transfer of wealth is a success, it is not then utilised in an effective manner as there is a shortfall in the required experience.
At NW Brown, our Wealth Management team encourage our clients, where appropriate, to involve their beneficiaries in their estate planning process. This could involve bringing their children to meetings so they can learn more about the many considerations which come into play for long-term financial planning, or setting up an investment account for them so they can become more familiar with portfolio management and the nature of risk and reward.
While we fully recognise there may be some areas which are sensitive to you, there are also topics which your beneficiaries may benefit from receiving independent advice or guidance from those outside of the family. This may include furthering their understanding on the effect of tax on their assets and the available allowances to mitigate this, or learning about the advantages and disadvantages of different investments and what would be appropriate in which circumstances.
A recent report by the Royal Bank of Canada* found that 64% of those they surveyed in the UK conducted their own research as their primary method to enhance their financial education. Although this certainly shows willing, due to the plethora of information available, people can miss key areas applicable to them or misinterpret their options to their detriment.
By involving your beneficiaries in the estate planning you carry out through us, we can assist in developing their knowledge in a way that is tailored to their circumstances. We would be more than happy to meet with them and answer their questions.
*Royal Bank of Canada 2017 Wealth Transfer Report
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