Find out if your assets are at risk and how you can protect yourself.

As part of this week-long programme focusing on protecting your assets, we’re bringing you a host of articles, myth busters and did-you-knows to make sure you’ve all the information you need.

In this article we’ll look at some of the ways you could be at risk and what you can do to protect against them.

1. You suddenly lose capacity – but what does that even mean? To make decisions about your money and property, you need mental and physical capacity. Unfortunately, people often assume incapacity is due to slow degenerative conditions, such as dementia but it can happen without warning, such as a stroke or an accident.Even more scarily, all your assets become frozen, which means no transactions on bank accounts, property, savings, pensions or anything else. And worse still, this includes joint assets, which can cause problems for your partner trying to manage day to day expenses, like paying bills and buying shopping.To protect from this, you can put Lasting Power of Attorney in place. This is a legal document that grants power to people you trust. It allows them to make decisions for you when you’re not able to.
2. Care fees take your house, savings or pension – this is a much bigger issue now than it ever was due to increased levels of homeownership, savings and longer life expectancy. Many not only need care but have the assets to pay for it. Most people arrange their Will so that on first death everything passes to the surviving partner and on second death it then goes to the children.However, when you leave your assets unconditionally to your partner, they then become their property. If your partner needs care, all your assets will be used to fund it. This means that when your partner dies, there’ll be no assets left to pass to your children.The way to protect from this is with a Property Protector, Savings Protector or Pension Protector trust. These are Will Trusts and work by instructing that your share of the assets go into trust on your death. This means you can stop your children being disinherited.
3. Second spouse syndrome disinherits your children – this is a more modern issue and largely due to changes in society and the greater prevalence of wealth.When couples make a Will and leave everything to each other on first death and the children on second death, they’re assuming nothing will change between theirs and their spouse’s death. However, it’s common for people to remarry after spousal death. This causes the accidental disinheritance of the children from the first marriage, because any previous Will becomes void after a remarriage.This can be prevented with the Property Protector, Savings Protector and Pension Protector Trusts. If you and your spouse put your assets in a trust, even after you die, and your spouse remarries, revoking their Will, your children still inherit your assets.Essentially, it’s a way to stop your assets going to your partner’s second spouse and their children rather than your own children.
4. Inheritance tax takes your money – When you die inheritance tax is paid at 40% on the total amount your estate is worth over the Nil Rate Band Threshold. This is currently £325,000 for all assets including property, cars, savings, pensions and cash. Anything over this will pay tax of 40%.Inheritance tax is a fact of life, however there are ways to reduce your liability but we’d always advise seeking professional advice on how to do this correctly for your personal circumstances. This could be anything from giving money to charity, giving assets away seven years before you die, insuring against it, or some other way that could suit your needs.As part of our Protect Week, we’re going to look at each of these in more detail, keep an eye out for further articles on ways you can protect yourself and your assets.

If you’d like to find out how at risk your assets are and whether there’s things you can do to protect them, get in touch on 01642 42 45 73 and we’ll talk through your options.

Joslin Rhodes are Independent Financial Advisers specialising in pension advice and retirement planning, authorised and regulated by the Financial Conduct Authority (FCA), we have the additional permissions to advise on defined benefit and final salary pension transfers.

Please note: Tax and estate planning services are not regulated by the Financial Conduct Authority.

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