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Summer Edition 2019

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Finesse your wealth plan

Finesse your wealth plan this summer Evaluating and and stress-testing the the cost cost of of your your lifestyle can can be be an an extremely worthwhile exercise, especially if you if you are are thinking about how how you you can can pass pass on on wealth to to children and and grandchildren. Get Get smart with with cash cash flow flow Kicking the the tyres tyres of of your your investment vehicles Painless estate planning Understanding if you if you can can While While every every family’s maintain your your desired standard When When making your your plan, plan, ask ask circumstances are are different, of of living living is vital is vital and and will will help help greatly with with your your future future investment decisions and and yourself the the following questions: we we all all want want the the transfer of of wealth from from one one generation What What liquid liquid assets do do I have I have to to the the next next to to be be as as smooth, estate estate planning. available? If my If my liquid liquid assets run run out, out, painless and and efficient as as possible. Planning well well Regular outgoings such such as as which which illiquid assets will will need need in in advance is very is very much much mortgage payments, insurance premiums, and and school fees fees are are easily easily identifiable, but but it’s it’s important nevertheless to to keep keep track track of of them. them. Keep Keep a a watchful eye eye also also to to be be realised? What What level level of of cash cash flow flow is is sustainable? Can Can I afford I afford to to gift gift capital sums sums to to loved loved ones ones without affecting my my lifestyle? Can Can I make I make regular gifts gifts to to recommended. Wealth can can be be more more than than simply financial assets. Ownership of of family family businesses, for for example, can can complicate matters. It’s It’s important to to balance the the on discretionary and and variable my my children out out of of my my excess expectations and and rights rights of of all all expenditure. Items Items such such as as income? family family members whether they they holidays, cars, cars, boats, boats, clothes and and houses can can have have a huge a huge Will Will there there be be enough income work work in the in the business or or not. not. to to maintain my my family’s living living impact on on the the state state of of your your standard when when I’m I’m gone? gone? Clear Clear communication financial position. What What is the is the likely likely value value of of my my between generations – and – and a a estate estate when when I pass I pass away? willingness to to have have potentially awkward conversations – is – is Once Once you’ve carried out out your your vital. vital. Research shows parents stress-test you’ll you’ll know know whether routinely overestimate the the your your assets are are more more than than enough to to support your your desired lifestyle, just just sufficient or or inadequate. clarity clarity and and quality of of their their communication with with their their children on on family family wealth matters.

Successful succession strategies There There are are several effective strategies that that can can be be used used individually or or in combination: 1. 1. Asset reduction: 2. 2. Asset freezing: 3. 3. Asset conversion: Gifting assets assets is one is one of the of the most most effective ways ways to to reduce the the value value of an of an estate estate and and therefore its its exposure to to Inheritance Tax Tax (IHT). (IHT). If If the the individual making the the gift gift survives for for seven seven years years beyond the the date date on on which which the the gift gift was was made, made, it is it not is not subject to IHT. to IHT. If they If they don’t don’t then then the funding of the of the IHT IHT liability will will need need to be to be factored into into the the planning. With With financial assets assets such such You You can can convert assets assets that that as as equities, which which should don’t don’t qualify for for IHT IHT relief relief appreciate in value in value over over time, time, into into assets assets that that qualify for for you you can can ensure that that future future specific IHT IHT reliefs, reliefs, such such increases value in value fall fall outside as as agricultural property or or your your estate. The The simplest business property. Certain method is to is make to make a loan. a loan. assets assets that that qualify for for IHT IHT With With a loan, a loan, any any growth from from relief relief can can be be transferred investing the the capital accrues to to vehicles such such as as trusts trusts to the to the borrower’s estate estate and and without the the usual usual lifetime not not the the lender’s. charge of IHT of IHT (20%). Find Find out out how how we we can can help help by by calling 020 020 7860 7860 5000 5000 or or visiting Together we we thrive HSBC HSBC Private Private Banking Banking does does not not provide provide tax advice. tax advice. You You should should seek seek independent tax advice. tax advice.