4 essential legal tips to protect your assets
PUBLISHED: 09:16 07 April 2017 | UPDATED: 09:22 07 April 2017
These four tips should be considered when protecting your personal and business assets and avoiding unnecessary costs
Acquiring and increasing the value of personal and business assets is a long-term goal for many people. However, only a very small proportion treat the protection of those assets as a priority. Failure to ensure your assets are protected in the event of unexpected life events can mean your investment is wasted.
So, where do you start and what needs to be considered?
Step 1 – Consider your will
A staggering 60% of people are estimated to be intestate (i.e. they do not have a Will). Even more have an out of date Will that has not been reviewed or, even worse, has been unintentionally revoked (perhaps by a subsequent marriage).
A carefully drafted Will can ensure that your assets are administered as you intend and can help to avoid conflict within families (which can quickly deplete the value of your estate). You may also be able to reduce inheritance tax obligations, or structure your estate so that assets are protected for beneficiaries while they are young or vulnerable.
A suitable Will is essential for business owners who wish to ensure the correct succession of their business assets and to maximise available reliefs on inheritance tax.
Step 2 – Prepare for the unexpected
Have you ever considered what would happen if you unexpectedly lost physical or mental capacity? In this situation, without appointing an attorney under a property and financial affairs Lasting Power of Attorney (LPA), no-one can access your assets to care for you or your family, or manage your business.
In the absence of an LPA, a costly court application is required to appoint a deputy – a process which can take over six months. During that time your assets are effectively frozen and unavailable to you. By appointing an attorney, you can name the right person to act on your behalf, and they will be ready to do so immediately.
If you have business interests, it is advisable to set up a business LPA. This is especially important if the people to whom you would entrust control of your personal assets are different to those who you wish to make decisions relating to your business interests. For owner-managed businesses, this is an insurance policy that you cannot afford to do without.
Step 3 – Protect your children’s future
Many people want to plan for and be able to support their children’s future, whether that’s paying for education, or helping them to get a foot on the property ladder. Taking sensible planning steps early can protect funds for your children before they are needed (perhaps by ring-fencing assets into a trust), and may minimise the tax take in the long-term.
Step 4 – Protect your business
Most business owners will have considered or taken out business protection insurance. Often this is where the planning ends.
In this situation, if the intention on death would be for your business partners to purchase your business interests (thereby giving cash to your family), you need to ensure the right structures are in place to achieve this smoothly, efficiently and at minimal cost and stress. Once the insurance policy has been taken out, it must be transferred into trust and the right agreements between the business owners should be drafted. Get this wrong, or fail to implement correctly, and you may well have wasted the cost of the insurance, increased tax implications and created a costly headache for your beneficiaries.
In summary, as much as it may seem a grim prospect, adopting a step by step approach to estate protection will help you prepare for life’s challenges and ensure you, your family and your business are protected.
Eleanor Gadd is an associate at asb law – if you would like to discuss any of the points above with Eleanor or her colleagues, please contact firstname.lastname@example.org or visit www.asb-law.com