What will your legacy be and how can your financial planner help you create it?
Look up the dictionary definition of “legacy” and you’ll find that it focuses on the wealth, property, and other assets that you might pass on when you die. Yet, your achievements and how you’re remembered by family and loved ones also plays in.
While you may first think about the financial aspect of what you’ll be leaving to your family and loved ones, beyond this your thoughts may turn to the good that you’ve done in supporting others. You may, for example, leave a lasting impression thanks to your contribution to your local community or supporting a charity that’s close to your heart.
Read on to understand how your decisions now will affect the legacy you leave and how working with a financial planner can help you enjoy your desired retirement and protect the wealth you leave to your loved ones.
Your retirement could offer the ideal opportunity to reflect on your non-financial legacy
Having spent many years focusing on your career, building your wealth, and raising a family, time was likely lacking. So, your retirement may present new opportunities, allowing you to spend more time doing things you love, or supporting causes you care about.
Your financial plan begins with your goals and aspirations. So, it’s the ideal opportunity to spend time thinking about how you want to spend your retirement.
Whether you’re looking forward to exploring the world, enjoying your favourite hobbies, or creating special memories by prioritising more quality time with your friends, children, and grandchildren – knowing what you really want from your next chapter can help you understand what you need to meet your goals.
While you may also be looking forward to having more time to simply relax at home, you might wish to balance this with some volunteering or charity work.
From volunteering to support local charities on your doorstep to committing time and energy to contribute to community projects in underdeveloped countries, your retirement could open up a world of opportunity to leave a lasting legacy through changes you make during your lifetime.
A tailored financial plan can help you meet your lifestyle goals and give you the freedom to focus on the things that most matter to you.
Give gifts to protect your financial legacy from the eroding effect of Inheritance Tax
There are a few ways you can protect your financial legacy from being eroded by Inheritance Tax (IHT).
For example, you may be able to mitigate IHT on your estate by making most of your annual gifting allowances. In the 2024/25 tax year, these include:
- An annual gifting allowance of £3,000: You can carry forward any unused allowance from the previous tax year, so if you haven’t used last year’s gifting allowance, you could gift up to £6,000.
- Wedding gifts: You can gift up to £5,000 to a child, £2,500 to a grandchild or great-grandchild, and £1,000 to any other person.
- Small gifts up to £250: You can gift up to £250 to as many people as you’d like, as long as you don’t use it to on someone who has already benefited from another allowance during the same tax year.
- Regular financial gifts from surplus income: To fall outside your estate, these financial gifts must be made regularly, and be affordable from your income without having any detrimental effect on your own quality of life.
Read more: 6 practical ways you could use gifting to reduce your IHT liability
Another way to reduce a potential IHT charge is to leave a financial gift to charity in your will. According to research from Remember a Charity, this type of legacy income is hugely valuable to charitable causes, totalling about £4 billion a year.
For you, the benefit comes with a reduced IHT rate. If you leave at least 10% of your net estate to charity in your will, you could reduce a potential IHT charge on your estate from 40% to 36% (2024/25).
As a result, leaving a charitable gift in your will could help you support a cause you care about, while your loved ones may benefit from paying less tax on their inheritance.
Speak to a financial planner who can help ensure you leave the legacy you’d like
If you would like to leave a legacy to your loved ones, get in touch.
Taking a holistic approach, we can help you understand how to use your wealth for good.
This starts with you, your hopes, your dreams, and your long-term goals – for your retirement and the legacy you’d like to leave to your family and loved ones.
Following a detailed conversation about your plans, we can help you understand how much money you’ll need to both enjoy the retirement lifestyle you’ve worked hard to achieve, and ensure you leave the lasting legacy you want.
With a deep understanding of what you hope to achieve, we’ll create an effective plan to ensure that you’re well-prepared to transfer your hard-earned wealth to the next generation smoothly and tax-efficiently.
Plus, using smart cashflow modelling tools, we can effectively forecast how much money you will need for the rest of your life, factoring in any number of things you might wish to do.
Read more: Is a living legacy right for you? Here’s what to think about
Get in touch
If you’re keen to leave a lasting legacy, we’re here to help. We’ll work with you to help you achieve your life goals, while also ensuring that you have a robust estate plan to help you transfer your family wealth to the next generation as tax-efficiently as possible.
Email us at info@harperlees.co.uk or call 01277 350560 to find out more and we’ll be very happy to help.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate estate planning, cashflow planning, tax planning, or will writing.