When it comes to finances, the fear of running out of money can often stop us from truly enjoying life. It is understandable as no one wants to risk their financial security by being too generous. But here’s the thing, making the most of your money while you can is often a far better option than leaving it too late. After all, you can’t take it with you!
Many people find themselves in a position where they already have assets they believe are surplus to their requirements. Perhaps from selling a business, inheriting money, or simply accumulating more than needed over the years. If confident these funds won’t be needed, then gifting can be a powerful way to share wealth with loved ones and/or charitable causes.
However, gifting isn’t always straightforward. You might not be sure whether your own future needs could change, or perhaps the intended recipients aren’t quite ready to receive a large sum. This is where lifestyle planning comes in it can help you make informed decisions, balancing generosity with financial security.
The Fear of Running Out of MoneyEven those with substantial wealth often hesitate to gift or spend too much, worried that an unforeseen expense might throw everything off balance. This could be medical costs, long-term care, or even a sudden urge to buy that villa abroad! Life can be unpredictable. It is therefore crucial to have a clear picture of your financial future before making big financial decisions.
The Inheritance Tax Dilemma
Gifting money during your lifetime, either directly or through trusts and other inheritance tax efficient arrangements, can help reduce the value of your estate and ease the inheritance tax (IHT) burden. However, many people delay making these decisions because they’re unsure how much they’ll need for themselves.
The key is striking a balance between reducing IHT and maintaining your lifestyle.
Finding the Right Balance – a straightforward three-step approach to help:
- Map Out Your Needs
Start by understanding what you need to cover your own expenses comfortably. This includes everyday living costs, planned big spends (holidays, home improvements), and a buffer for the unexpected.
- Plan for the What Ifs
Consider the bigger uncertainties e.g. care costs, medical expenses, or supporting family members in the future. A solid lifestyle plan helps you budget for these “what-if” scenarios without risking your own financial security.
- Explore Your Gifting Options
If you know you have surplus funds, there are several options available.
You could gift directly to loved ones, contribute to trust-based solutions, or set up investments for future generations.
If those you would like to benefit from your generosity aren’t perhaps quite ready yet to receive a large gift, trusts can be a flexible way to hold assets until the time is right. This approach also provides peace of mind, allowing you to gift confidently having assessed the impact on your own finances beforehand.
Enjoy Life Now, Not Just Later
It’s easy to fall into the trap of always saving for a rainy day. But what if that day never comes? Or worse, what if it does and you are no longer fit enough to enjoy it?
The real benefit of lifestyle planning is that it gives you permission to spend while still able to make the most of it. Whether it’s that dream holiday, a road trip, or simply spending more time with loved ones. Good planning can help make it happen.
Life’s too short to live on “what ifs” – let’s make sure your money works as hard as you have.
If you’re wondering how much you can afford to gift now without compromising your own financial security, we’re here to help.
Contact us on 0330 320 9280, email info@cravenstreeetwealth.com or complete our online enquiry form for practical advice tailored to your own circumstances and needs.
The content of this article is for information only and does not constitute formal financial advice. This material is for general information only and does not constitute investment, tax, legal or other forms of advice.
References to legislation and tax is based on our understanding of United Kingdom law and HM Revenue & Customs practice at the date of publication. These may be subject to change in the future. Tax rates and reliefs may be altered. The value of tax reliefs to the investor depends on their financial circumstances. No guarantees are given regarding the effectiveness of any arrangements entered into on the basis of these comments.
You should not rely on this information to make, or refrain from making any decisions. Always obtain independent, professional advice for your own particular situation.
Craven Street Financial Planning Limited is authorised and regulated by the Financial Conduct Authority (FCA). The FC
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