Asset Protection: not just Inheritance Tax.
Inheritance Tax is the thing most clients worry about. But for many people it isn’t necessarily the only significant aspect that your estate planning solicitor should be worrying about. We’ll talk about other aspects in other articles, but this one is about asset protection. Anyones wealth can drain away very quickly if things go badly wrong. So it makes sense to have some basic protection in place. After all, if you are not in control, you would wish to chose who would be in charge wouldn’t you? The alternative is you leave the decision to the Court of Protection.
Which are the most effective methods of protecting assets? That we will discuss with clients.
Some of the potential threats are:
Business gone wrong. Whether it is your or your employers. (Get the MD to talk to us!)
Spendthrift children/ grandchildren.
Dependents who cannot look after themselves financially or otherwise.
Childrens partners being unreliable, gold diggers or divorcing them and taking much of their inheritance.
Uninsured accident or libel or slander. Many fires seem to happen days after people forget to renew the insurance!
Court of Protection Deputies being put in charge of your assets. NOT your family. If you have an accident, stroke or lose the ability to make decisions temporarily or permanently, it is too late to take relatively simple precautions. “Loss of mental capacity” happens to young people as well as old.
Over reliance on one class of asset (typically the family business, which could die with you, your illness, or through legal changes or the actions of a powerful competitor.) We will talk about business succession planning as well if you become one of our clients. We would rather the business survived too!
Triggering tax charges unnecessarily.
The biggest threat is leaving planning too late.
I am sure you can think of many more, but the biggest threat is just leaving it too late. Early planning is always better and usually cheaper. Having said that, ongoing review is important too, and that is something we can help with.
We often get calls from people saying that they are about to be sued (usually abroad) in unfair circumstances and they want to protect at least their UK assets from a potentially catastrophic (and according to them, unfair) Court judgement. But at that point it is too late to do anything which cannot be undone by a good lawyer, albeit at some expense.
What sort of protection is appropriate is something our Head of Legal, a solicitor and qualified tax barrister (s206) would discuss with you in the initial review. Once the general outline is established, then it is a matter of agreeing what measures need to be taken and how the plan should be implemented. The basics can be put in place pretty quickly. We don’t go in for exotic measures or ones which the Taxman is likely to challenge. It isn’t usually necessary, but if you are one of those who is determined the Taxman won’t get a penny, we can sort out the reliable basics and then you can take advice on more aggressive planning on top of it.
Asset protection work should always be carried out under blue skies with no clouds.
In other words, when you think it is not needed and there is no reason to believe it will be. It is too late to do anything when it has already become apparent that there is or could be a problem. That said, Asset Protection is just a part of your overall Legal Planning and IHT Planning strategy, so why not contact us today and start putting together a sound plan to protect and preserve your assets and family?