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Investing for children – The best ways to financially support

The average British child is worth just under 5,000 by the time they reach school. Chartered Financial Planner Rick Hollington discusses investing for children and the best ways that you can support them financially.

It can be difficult to know what initial steps to take when it comes to investing for children. There are many reasons why your descendants might look to you for financial support, and many routes you could take in funding them, if you so choose.

All children, regardless of means, benefit from learning simple concepts like saving to attain goals and operating within a budget. That can start with pocket money for non-essentials and mature into allowing teenage children to manage their own clothing budget or take control of a portion of the family’s charitable donations. You may even want to allow older teens to allocate and manage a small portfolio for exposure to investments.

 

Children’s key life moments

A nationwide survey [1] of parents has revealed the wealth that average British children have accumulated by the time they reach adulthood, with the average UK child having amassed just under £5,000 by the time they reach school at the age of five, just over £10,000 by the age of 18 and £12,000 by the time of their 21st birthday.

The majority of UK parents surveyed said they began saving for their children’s key life moments when they were five years old, with 27% saying they started before their child reached their first birthday and 15% even admitting they began before their child was even conceived!

 

Making their own money

The findings revealed that £125 a month was the average amount that parents put aside for their child’s future each month. 39% of those who responded said they feel it is the duty of every parent to save for their children, whilst 55% believe it is their duty but admit they can struggle with the obligation. One in 20 (6%) insist their children should make their own money and their own way in life, without assistance from their parents.

 

Best possible start in life

Everyone wants to do right by their child but we appreciate it’s not always easy. Instead of large presents on birthdays or at Christmas, consider using part of the budget to save for their future. The majority of parents want to give their child the best possible start in life, but what are the best ways to begin investing for children? Some ways of passing money on to your children can start very early, including putting money into a Junior Individual Savings Account (JISA) for your child.

 

Helping the younger generation

The current annual allowance for contributions is £9,000 (tax year 2022/23), meaning that if you start paying into a JISA when your child is young, they could find themselves with a sizeable sum of money by the age of 18. Focusing on later life stages, some parents might also consider contributing to their children’s pension pots.

Covering school fees and other expenses for grandchildren is another possible way to help out younger generations financially. But with house prices at historically high levels, the most common ‘Bank of Mum and Dad’ queries we receive concern helping the younger generation onto the property ladder.

 

Invest in your children today

Putting money aside for a child is a great way to prepare them for their future, and can also teach valuable lessons about their managing their finances. To discuss how we could help you make their savings work harder, please contact us for more information.

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Source data: [1] The research of 1,500 parents with dependents currently living at home with their parents, was commissioned by Perspectus Global in March 2021 on behalf of Brewin Dolphin

Attempting to time the market could cost you dearly

Covid and its global impact has dominated the markets over the past two years, while Russia’s invasion of Ukraine is today’s most pressing issue.

These global events have proved to be exceptionally turbulent and have demonstrated what it means to expect the unexpected. As a result timing the market is extremely difficult to do well and should be avoided, particularly by long-term investors.

While we will not always be impacted as much by fluctuations in the market that we have seen over the past two years, there will always be market cycles.

Previous years have seen the likes of Brexit, the global financial crisis and the dot com bubble take centre stage, but history has shown us that even when market impacts are severe, there is always recovery.

 

Avoid knee jerk reactions

Ultimately staying calm and objective and avoiding the temptation of panic and knee jerk reactions, is central to keeping any financial plan on track for success, as missing out on the markets’ best days can be extremely damaging to returns in the short and long-term.

The effect of this can be demonstrated by examining four different return profiles of an investor in the FTSE All-Share index from 31 December 2019 to 31 December 2021.

Source: Morningstar. Based on initial investment of £100,000 in the FTSE All Share index. Bid-bid returns from 31 December 2019 to 31 December 2021. Net Income reinvested.

 

Positive return

Remaining fully invested during this extremely tricky period would have produced a positive return of around 6.7%.

But had the investor missed out on just the five best days of positive returns over the period, that return drops to -16.8%. And had they missed the best 20 days as a result of timing the market – many of which occurred around the point of ‘maximum fear’ in spring 2020 – the return would have been -42.6%.

 

Long-term planning

This clearly demonstrates that it has never been more important to adopt a consistently applied methodology when investing and remembering the importance of long-term planning, whatever the socio-economic situation.

And these return profiles speak volumes as while short-term volatility may feel unsettling, taking time out of the market can have a far more significant impact.

At all times it is crucial to stay focussed on your financial plan and long-term goals. If you need to discuss your options or have any questions about investments, you can speak to a financial adviser.

 

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Buying your first home, giving first time buyers an edge

Buying your first home? Whether you’re a young professional or simply planning for the future and trying to be smart with your money, buying your first home is one of the biggest financial decisions you’ll ever make.

The journey of purchasing a property is not always easy and hurdles can crop up along the way, so it can feel simultaneously exciting and overwhelming. However, if you are a first-time buyer you do have one advantage when it comes to securing a property.

By not already owning a home, you are not part of a property chain. This is attractive to sellers as it means you are not tied down to the sale of your own home before you can move into your new one.

With this in mind, we have compiled our top ten steps to give first-time buyers an edge when they decide to get on the property ladder.

 

10 steps to help you in buying your first home

1) Set a budget for buying your first home and stick to it

To get a sense of how much you can afford, you should obtain professional mortgage advice. Most estate agents will also require proof of your budget, so having an ‘Agreement in Principle’ from a mortgage lender will help speed up the process.

"An agreement in Principle (AIP) is the first step to getting a mortgage. It's sometimes called a Mortgage Promise or a Decision in Principle, and lets you know how much you could borrow before you apply for a mortgage" (Source:https://www.which.co.uk/money/mortgages-and-property/mortgages/getting-a-mortgage/mortgage-agreements-in-principle-aips-asz341v8z0g0)

You need to consider what you’re willing and able to spend on your new home. After you have saved for your deposit and applied for your mortgage, it is important to stick to your budget. Make sure you set a clear limit and do not view properties above that if you are not willing to haggle with the seller.

If you don’t want to dip into any further savings at the beginning, only view properties that you can afford.

 

2) Apply for a mortgage early

The vast majority of first-time buyers require a mortgage to afford a property purchase. If you arrange your mortgage as early as possible, you’ll be in a stronger position with sellers. And, it’ll relieve a little stress from the home buying process.

Leave it too late to get a mortgage, and you could risk losing your dream property. Having an ‘Agreement in Principle’ ready can help you appeal to sellers looking for a quicker transaction. Not only that, but it will also save you time in the long run.

 

3) Consider the extra fees involved in buying your first home

Make sure you are aware of the extra fees that are involved in the buying process. From stamp duty to solicitors’ fees, conveyancing fees, property searches and surveys, it’s useful to know what extra costs you’ll have to pay so you can plan your budget when you’re thinking of buying your first home.

These are just some of the extras that you need to be aware of. Be sure to include these in your budget calculations at the beginning so you are prepared for the extra expenses.

 

4) Instruct a conveyancer early

If you are committed to buying a property, you can instruct a solicitor or conveyancer without having the details. This will put you a step ahead of the rest when you have an offer accepted.

But you should instruct them to start the process as soon as your offer has been accepted on the property you intend to buy. Conveyancing is the process of transferring the legal title of a property from one homeowner to another.

 

5) Composure while on property viewings

When you find the property that you have been dreaming of, it can be easy to forget yourself. But keep in mind that your reactions may impact you further down the line.

Be positive and interested, but keep in mind that gushing or becoming overexcited will reveal your hand early. This could have a negative impact if you want to negotiate on price later.

 

6) Agents do not work for buyers

This is one of the key points that many buyers do not realise. Estate agents work for sellers. While they accommodate buyers during property viewings, their job is to sell the property at the highest price.

Being aware of this will help you conduct yourself during viewings while the agents are assessing you on behalf of the seller.

 

7) Consider government schemes

The government is committed to its pledge of turning ‘Generation Rent’ into ‘Generation Buy’. There are a number of schemes currently available to help first-time buyers get on the ladder:

Lifetime ISAs; shared ownership schemes; and the new Help to Buy: Equity Loan scheme which was launched on 1 April 2021.

The new Help to Buy: Equity Loan scheme is for first-time buyers and includes regional property price limits to ensure the scheme reaches the people who need it most. The new scheme will run until March 2023. As with the previous scheme, the government will lend homebuyers up to 20% of the cost of a newly built home, and up to 40% in London. You should find out which one is best for you as it could help you with your purchase.

 

8) Be mindful of the asking price when buying your first home

When you are looking for potential properties, one of the best tips is to be aware of the asking price. Remember it is not the same as value but the seller’s want.

Do your research for similar properties in the area to give you an idea of what approximate prices should be. This will prevent you from overpaying in an area where you do not have to.

 

9) Take out property surveys before buying your first home

When you’re buying your first home, it’s all too easy to get seduced by the look and feel of the place and ignore the shabby-chic brickwork or gurgling sounds coming from the boiler.

A valuation is often required by a mortgage lender but building surveys and homebuyer reports can reveal more about the property you are buying. They will prevent any nasty surprises and can even help you negotiate the asking price with the seller.

 

10) Ensure your credit score remains stable throughout buying your first home

You’ll need a healthy credit history to give lenders confidence in your ability to repay your mortgage. Often, buyers will overlook their credit score when the mortgage process has started. Lenders will revisit your credit file once completion looms so ensure you keep your credit score stable throughout the process.

Mortgage lenders consider your credit score and earning power, but also your spending habits. Avoid taking out new credit cards or opening any new accounts until the process is over to avoid incurring additional costs.

 

Take the first step to your mortgage

We’re here to help you open the door to a place of your own and make it easier to find a mortgage that’s right for you. To find out more and talk to us about your requirements, click the link below.

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Tax allowance and tax exemptions: How to make full use

The personal tax year comes to an end on 5th April, and with it, the chance for you to use your tax allowance and tax exemptions.

Fairstone Chartered financial planner Beverley Henderson takes a look at some key tax and financial planning tips to consider before the end of the tax year.

 

Individual Savings Accounts (ISAs)

Usually, you have to pay tax on any income or capital gains you earn from your investments; however, with an ISA, provided you stay within the pay-in limits, capital gains and income made from your investments won’t be taxed.

So it’s worth making sure you use your full ISA allowance of £20,000 for the 2021/22 tax year. You can put the entire amount into a Cash ISA, a Stocks & Shares ISA, an Innovative Finance ISA, or any combination of the three.

 

Contribute up to £9,000 into your child’s Junior ISA

You can also consider a Junior ISA fund, which builds up, free from tax on investment income and capital gains, until your child reaches age 18. At that point, the funds can either be withdrawn or rolled over into an adult ISA.

Relatives and friends can also contribute to your child’s Junior ISA, so long as you don’t go above the £9,000 limit for 2021/22.

Text reads: "Relatives and friends can also contribute to your child's Junior ISA, so long as you don't go above the £9,000 limit for 2021/22

 

Utilise your capital gains tax allowance (and losses)

Many people overlook the capital gains tax allowance, which is £12,300 for the tax year 2021/22. Always remember to use your full allowance every tax year and if you’re married or in a civil partnership, you will both have an allowance – so consider transferring assets between you to reduce your tax bill.

If you realise any losses in the same tax year, these are offset against the gains before the capital gains tax exemption amount is deducted. With this in mind, if your gains would be covered by your exempt amount, capital losses could be wasted, so consider postponing a sale that will generate a loss until the following tax year or realising more gains in the current year.

 

Maximise pension contributions

A pension can be a good way to invest your money for the future as you can get tax relief on the payments you make to your pension pot.

You can contribute up to 100% of your earnings to your pension in each tax year, subject to the annual allowance, which is £40,000 for 2021/22. If you surpass this, you may incur an annual allowance tax charge.

However, if you haven’t used all your allowance in the last three tax years, it might be possible to pay more into your pension plan using ‘carry forward’, though bear in mind the amount is still capped at 100% of your earnings.

Text reads: "You can contribute up to 100% of your earnings to your pension each tax year, subject to annual allowance, which is £40k for 2021/22

 

Different rules apply if you’ve already started to take money out of your pension plan and you’re affected by the Money Purchase Annual Allowance, or if your income, when combined with your employer’s payments, exceeds £240,000.

Even if you have no earnings, are a non-taxpayer or receive pension income, you still have an annual pension allowance of £3,600. This means that you can pay £2,880 into a pension each year and receive tax relief of £720. You can even make pension contributions for your children of £3,600 a year. However, there are some provider restrictions from age 75.

 

Make regular IHT-free gifts

If you establish a pattern of gifts that can be shown to be covered by your net income, without reducing your capital assets or normal standard of living, these gifts will be free of Inheritance Tax. A key thing to remember is that you don’t have to make these gifts to the same people each year.

 

Use the IHT marriage tax exemptions

You and your spouse can each give your children £5,000 in consideration of an upcoming wedding, or £2,500 for a grandchild’s wedding, free of Inheritance Tax. The marriage tax exemptions can also be combined with your £3,000 a year Inheritance Tax exemption, which would allow you to make larger exempt gifts.

 

Make IHT-free gifts each tax year

Remember, you can make gifts of £3,000 each year, along with your spouse, which are free of Inheritance Tax. Don’t worry if you forget to make your £3,000 gift one year – you can catch this up in the next tax year. These gifts are in addition to gifts you make out of your regular income.

 

Leave some of your estate to charity

In cases where at least 10% of your net estate is left to charities, the Inheritance Tax on the remainder is charged at 36% instead of 40%. The exact calculation of your net estate is quite complicated, so it’s important to receive professional advice when drawing up or amending your Will.

The end of the current tax year is on the horizon so if you haven’t taken the time to review your finances and make the most of these exemptions, now is the time.

 

Sign up to our upcoming tax year end webinar

No one likes to miss out, and as the tax year end approaches, you’ll want to ensure you’re making the most of your allowances and putting yourself in the best position for the new tax year.

In our upcoming 30-minute webinar, Fairstone’s Tean Hatt will look at how you can avoid losing out and what positive steps you can take to plan for the financial future of you and your family.

Can you afford not to attend?

Sign up to webinar

 

 

Disclaimer

information is based on our current understanding of taxation legislation and regulations. any levels and bases of, and reliefs from, taxation are subject to change.

The value of investments and income from them may go down. You may not get back the original amount invested. Past performance is not a reliable indicator of future performance.

5 surprising practical tips for financial planning in your 30s

Many changes take place in your 30s, from growing your family to moving up in your career. Taking charge of your finances during this time can help you to achieve future financial success. Fairstone’s Sarah Tory takes us through 5 surprising practical tips for financial planning in your 30s.

 

Financial planning in your 30s

1) Set your financial goals

From a financial planning perspective, your thirties are all about getting achievable goals in place and making sure you have a realistic plan. You will likely have a combination of short and long-term goals and will need to consider the best way to save for each.

This may include milestones such as getting established on the property ladder, saving for your retirement and if you have children, you may also be focussed on saving for school fees and building additional wealth for your family.

 

2) Focus on your pension

No final salary pensions and no ‘jobs for life’ mean that as you enter your 30s, you could well have been in several jobs and accrued little to no pension at all. But while retirement may seem a long way off, by the end of your 30s you are likely to be nearly 20 years into your career and perhaps as little as 25 years from retirement. Therefore, you should be reviewing your pension contributions at least annually and make sure you’re increasing them as your income grows.

Retirement planning in your 30s is important to consider, financial advisers have a saying that it is ‘easier to grow into income than out’; meaning that as we earn more, we all too easily increase our spending without really thinking about it. Increasing pensions after a pay rise or bonus avoids getting used to the extra money too quickly.  If you can afford to do it, you’ll thank yourself in the end for the small sacrifices made at this age.

 

Retiree relaxes in chair.

 

3) Protect you and your loved ones

The consequences of inadequate protection could be much more devastating when you’re in your 30s and perhaps have a family and a house, so it’s important to align your protection needs to your financial plans. In terms of protection planning, income protection and a well thought out family income benefit plan could prevent serious financial hardship, as underpinning the family’s income is the cornerstone of planning at any age.

It may be too that larger mortgages are now in place and ensuring they are adequately covered is entirely sensible.

 

4) Keep track of your investments

As your career becomes more established and your income grows, you really need to make sure that your money is working for you.  The stock market isn’t the preserve of the old and the rich; making sure your money has a good chance of growing and keeping its spending power is important if you have funds put aside for your long-term goals. If you have investments in place already, you should be reviewing these regularly to make sure they’re still right for you and that they are in line with your goals and attitude to risk. You may also want to consider looking into short-term tax efficient savings options like ISAs.

 

5) Ask the financial planning experts

In your 30s, you may well be very busy with a career, children and running a home. You are probably far more cost conscious than your parents so paying for financial advice may seem like a luxury you can’t afford. And even if it was free, you might feel you don’t have time or assets to focus on it right now.

However, a good financial adviser is in essence a project manager of your assets and goals and engaging early is absolutely worth doing. It is always good to get a sense of ‘where you are right now’ and an adviser should be able to give you a really good idea. In essence, financial planning in your 30s should be all about solidifying intent, getting achievable goals in place and making sure a realistic plan is established, implemented and reviewed.

And if all of this feels just a little too much or a little too grown up; make a Will, get life cover on your debts and save as much as you possibly can into your pension.

 

The value of investments may fluctuate in price or value and you may get back less than the amount originally invested. Past performance is not a guide to the future. The views expressed in this publication represent those of the author and do not constitute financial advice.

 

Take control of your financial future

Our latest report, examines the importance of starting your financial journey early and the key financial considerations for different life stages.

No matter your age, find out how you could protect your financial future below:

Download: Changing Landscapes- Retirement is not just for the old

 

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5 top tips for financial planning in your 60s

When you hit your 60s, you have a lot to think about when it comes to your finances, from pensions and reviewing life and wealth protection, to considering any potential long term care needs.

1. Understand your financial position

Undoubtedly the main thing to start thinking about as you approach retirement is what your income and expenditure will be. For clarity that’s not what you hope they will be, but what they realistically will need to be. After all, there is no point in building a realistic plan around an unrealistic target or worse still a target that you aren’t actually happy with – so be truly honest with yourself!

At this age you will normally find that some costs will actually go up. Medical costs perhaps as you get older but also holidays and day to day spending as you are not tied up in work each day. Fuel or domestic travel costs on the other hand will likely reduce as you stop the daily commute to work.

We always use cashflow modelling with clients and make use of personal allowances, as failing to take tax into account (or indeed not using available allowances) can have a surprisingly detrimental effect on the efficiency and sustainability of your income.

2. Think about gifting 

If you have a large estate, it is at this point that you might also want to start developing a plan to reduce your estate for inheritance tax purposes. Gifting money is one of the easiest ways to reduce inheritance tax, but you don’t want to give away money you will later need.

Again, being realistic about future care costs is therefore important at this stage.

With all of this in mind, now is the time to do a holistic review of your pensions and investment portfolios to ensure that they not only meet your agreed attitude to risk and capacity for loss but are also able to provide the returns required to fund the lifestyle you have set your hopes on.

3. Review your investments

Cash in the bank is only ever going to go down in real terms (in today’s interest rate market) as inflation relentlessly takes bites out of its purchasing power.

Reviewing your investments at least annually is also therefore vital to ensuring that your plans remain on track and this enables you to make any necessary changes along the way.

4. Keep your Will up to date

If you haven’t already done so, now is the time to look at revising your Wills and also arranging Powers of Attorney. Most of us will hopefully still feel like spring chickens when we retire but both of these documents will all but certainly be required one day, so getting these things in order now means you don’t have to be reminded to do them every year (by your financial adviser) or worse still, you need them before you have them.

5. Introduce your family to your financial adviser

Updating your Will also provides a great opportunity to introduce your adviser to your family as if/when something does happen, your adviser is likely to be one of the most knowledgeable person in terms of your financial affairs and be in the best position to help your family when you are no longer around.

While retirement these days looks different for each of us, taking time to go over your plan will enable you to make any necessary adjustments so that you can retire with peace of mind about your finances.

Chartered Financial Planner Richard Hollington

Our latest report, Changing Landscapes: Retirement is not just for the old, examines the importance of starting your financial journey early and key financial considerations for different life stages.

Download our white paper here

 

To be matched to an expert financial adviser in your local area, click here.

The value of investments may fluctuate in price or value and you may get back less than the amount originally invested. Past performance is not a guide to the future. The views expressed in this publication represent those of the author and do not constitute financial advice.

Four tips for financial planning in your teens

The sooner you start managing your finances, the better prepared you will be, and developing good financial habits before your 20s will give you the best head start.

Fairstone Chartered financial planner Simon Turner has identified four top tips you can take in your teens to kickstart your personal finance journey.

  1. Open a savings account
  2. Start an ISA
  3. Explore investment preferences
  4. Look into available Government schemes

As you start to become more independent it’s a great time to start thinking about your options and how you can segment funds to meet your short-term, medium-term and long-term needs. This can cover anything from cash deposits into traditional savings accounts to ISAs and even your pension.

One 14-year-old client explained that his focus was on “knowing and learning how to use money as well as putting any savings away for the longer term”.

If you fail to do anything in your teens, you are potentially limiting your choices for your future. Most under 20s have high aspirations of what career they want to have, where they want to travel and what they want to buy and planning from an early age can help to realise these aspirations.

While at this age there is usually no need to implement any protection plans as there is often no debt, dependents, or income to protect, it is a very good time to start the discussion around future protection plans.

Our latest report, Changing Landscapes: Retirement is not just for the old, examines the importance of starting your financial journey early and key financial considerations for different life stages. You can download a copy here.

To be matched to an expert financial adviser in your local area, click here.

The value of investments may fluctuate in price or value and you may get back less than the amount originally invested. Past performance is not a guide to the future. The views expressed in this publication represent those of the author and do not constitute financial advice.

Billions up for grabs in lost pensions

According to recent research commissioned by the Association of British Insurers (ABI), there are around 1.6 million pension pots worth more than £19 billion unclaimed, while the Government predict that there could be around 50 million dormant and lost pensions by 2050.

A lot of the problems are caused by people changing jobs and or address but failing to notify their pension provider.

Change of details

On average, people tend to move house eight times and have 11 different jobs over their lifetime and while almost 90% of people notified their GP and dentist about their change of address, only 1 in 25 considered telling their pension provider, according to the ABI research.

Around two thirds of UK savers have more than one pension and moving forward, changing work patterns will mean that the number of people with multiple pensions will increase.

In my 20-year career, I have been a member of three company pension schemes and I have also had two private arrangements. Given that the employment landscape has evolved significantly over the last few decades and changing jobs multiple times before retirement is now very much the norm, I don’t think this is unusual.

The days of a job for life have certainly passed. As a financial planner, I have been lucky in that I have been able to track and consolidate my pension when appropriate. However latest figures show there is an estimated £19.4 billion unclaimed sitting in around 1.6 million pension pots – the equivalent of nearly £13,000 per pot.

Most people I know probably wouldn’t forget having £13,000 lying in a bank account – I still remember that I have a student account with Bank of Scotland with 73 pence in it. So, why do some people forget about their pension built up with an ex-employer?

Locating your lost pensions

There are several steps you can take if you believe you may have a lost pension pot.

If you’re unsure of any previous pension provider you may have had, the first port of call should be the Pension Tracing Service. This is a free service which searches a database of more than 200,000 workplaces and personal pension schemes to try to find the contact details an individual may need.

If you do trace any missing pension pots, the next decision you will need to make is to either consolidate these or keep them as they are.

This is really the time to take professional advice as while bringing together pension pots could provide a clearer picture of retirement assets, a pension consolidation is not always appropriate. For example, an individual may have a lost defined benefit plan and having a guaranteed income may suit the individual better. A defined contribution plan may also have valuable benefits such as a guaranteed annuity rate which could provide a high level of guaranteed income which would be lost if switched to another plan.

A financial planner can listen to a consumer’s individual needs and objectives and then create a proposal using the pensions plans in the most appropriate and advantageous way.

Fairstone Chartered Financial Planner Peter Savage

 

 

 

 

 

 

 

 

FAQ’s – Wills and Power of Attorneys

Fairstone Chartered Financial Planner Sean Larkin looks at Frequently Asked Questions around Wills.

  1. How do I go about making a Will?

Whilst you can make a DIY Will, it is best to use a professional Will drafter such as a solicitor to ensure that it is drafted correctly as the consequences of getting this wrong can be expensive.

  1. What will I need to consider before making a Will?

Firstly, decide who you wish to appoint as executors to handle your estate on death. If you have children under 18 years, decide who you also want as their guardians. Then itemise any specific bequests that you wish to make, noting down what they are, amount of money or percentage if applicable and the names and addresses of those that you wish to benefit. This can also include a charity.

Then decide who you wish to benefit from your remaining estate such as your loved ones, family or friends. Consider what you would like to happen if any of your beneficiaries were to die before you and who you would like to benefit in their absence.

  1. How do I work out the value of my estate?

You can work out the value of your estate by noting down and totting up the value of your money, investments, life assurance not in trust, property and possessions. Then deduct any liabilities you have such as mortgages, credit cards and car loans etc. This will give you the net value of your estate.

  1. Is making a Will expensive?

Most Wills are straight forward and inexpensive to set up in comparison to the costs and consequences of not having one.

  1. How many executors should I appoint?

Most people appoint their respective spouse or partner, however it is important to consider that they could predecease you and therefore appointing an extra executor would be beneficial.

  1. What happens if I die without making a Will?

The Government will step in and decide who will benefit from your estate through the laws of intestacy. This may mean that people could benefit that you may not have wished to.

  1. I live with my partner but I’m not married or in a civil partnership, how would I be affected?

The law of intestacy doesn’t recognise partnerships; this would mean your partner would not be able to benefit from your estate under these rules.

  1. I have children under the age of 18; can I make provision for them in the event of my death?

It’s even more important that you have a Will in place if you have children under the age of 18. Through a Will, you can appoint legal guardians to look after and be responsible for your children until they become adults.

  1. How often should I update my Will?

There is no set time period, however a good way to update your Will is to do this at any major life event or anytime you wish to change how and who you want to benefit from your estate .

  1. Where will I store my Will?

It is best to store your Will with a solicitor. However, if you are planning on keeping it at home, it is best to store this in a fire-proof safe and register it with the National Will Register.

  1. What will I need to consider before making an LPA?

You will need to consider who you wish to appoint as your attorneys. This can be anyone over the age of 18 years such as relatives, friends, husband or wife. You can also appoint a professional such as a solicitor. When appointing attorneys, you should give consideration as to how well they look after their own affairs and if you would trust them to make decisions in your best interests.

  1. How many attorney’s should I appoint?

It is good practice to appoint at least two people and to give some thought as to whether you wish for them make decisions separately or together.

  1. How do I go about applying and registering an LPA?

You can apply and register for an LPA via the www.gov.uk/power-of-attorney/make-lasting-power .

Please note LPA’s are only applicable in England and Wales. You can find out more about making an Enduring Power of Attorney in N.Ireland or Power of Attorney in Scotland via the following websites:

https://www.justice-ni.gov.uk/articles/information-enduring-powers-attorney-epa

https://www.publicguardian-scotland.gov.uk/power-of-attorney

Wills and LPAs are not regulated by the FCA. The details relating to the laws of England & Wales are correct at the time of publication, and legislation may change. Fairstone Group Limited and associated companies are not legal advisers therefore specialist legal advice may be required before establishing Wills and LPAs under any jurisdiction applicable to place of residence. 

Your pension options: Annuities and drawdown

Unfortunately, no one knows what their retirement reality will be until they get there and there is no one-size-fits-all solution. However, professional financial advice can help you to make the decisions that work for you and your personal circumstances to maximise your retirement fund.

Annuities work by taking your pension savings and paying out a guaranteed income for life, or over a fixed term. They are still right for some people, but committing to an annuity can mean less flexibility with your pension money. With drawdown, money left in your pension pot when you die can be passed to your family.

Annuities

When you come to retire, 25% of your total pension fund can usually be taken as a tax-free lump sum; the remainder can be used to buy an annuity.

An annuity is a type of insurance contract. Once purchased, the insurance company is responsible for providing you with a guaranteed income – any time from age 55 – which is payable for the rest of your life, unless it is a fixed term annuity.

There are several types of annuity and you are typically not obliged to purchase your annuity through your pension scheme provider.

Once it’s set up, an annuity is final and cannot be amended, so it’s vital that you think about your options carefully. You will need to consider both your immediate and long-term income needs as well as those of any spouse or partner.

An independent financial adviser can help you find the most appropriate product for you.

Drawdown

Flexi-access drawdown is the means by which – at age 55 or over – you can choose to draw your income directly from pension savings.

This approach offers you greater flexibility and choice over how you utilise your retirement fund. You can choose to take regular monthly or annual payments or take a series of lump-sum payments as and when you need them. This flexibility allows you to draw your income in line with your needs throughout retirement.

You can still access up to 25% as a tax-free lump sum. This can either be drawn in one go, or in phases. Once you exceed the tax-free cash allowance you will be taxed on any withdrawals at your highest marginal rate.

It is important to remember that if you choose the drawdown option, your money stays invested and it has the potential to go up or down. You need to ensure that your fund will provide an income for the rest of your lifetime, so independent financial advice around how to structure your investments in line with your personal circumstances and your attitude to risk, is paramount.

Ready to get started with your retirement plan? Let us match you to a local adviser today.