Now that the new financial year is underway, it is a great time to take a look at sprucing up your finances to ensure your home and assets alike are in tip top order for the spring.
Take a look at our 10 step plan to getting better control of your assets, which will give you peace of mind and potentially save money and stress in the long run!
- 1 - Get the full picture of your assets. This means everything - from bank accounts and cars to your home and any other property, pension portfolios and investments, both in the UK and overseas. Make a list of these with their current rough values. Don’t forget to include online accounts and investments, even if they don’t supply you with any paperwork. You may wish to consider putting a list of your assets with your Will, to help identify your estate in the future – your loved ones will thank you for it!
- 2 -Consider your income. Is it a regular income, or does it fluctuate? If it fluctuates, try to work out how much you can realistically expect to receive on average every month throughout the year.
- 3 - Make a list of all your debts and any costs you are obliged to pay, like child maintenance, rent or mortgage payments or council tax, utility or other bills.
You should now have a full picture of what you already have, as well as what you can expect to come in and what you can expect to go out every month. So now it’s time to consider:
- 4 - Are your assets working hard enough for you? Make sure that your investments are bringing in the maximum returns and that large sums of money are not sitting in accounts with low interest rates. If you’re not sure whether you could be getting more out of your assets, speak to a financial advisor for their advice. They will have access to the most up-to-date offers available. When you are considering your pension portfolios, make sure you also think about whether your pension could be structured more efficiently, as many pensions are portable and can be moved to a better performing scheme of your choice.
- 5 - Are your combined assets worth more than £325,000? If they are, you should be considering Inheritance Tax Planning. In order to comply fully with tax requirements whilst ensuring you are not overpaying, it’s best to seek advice from a solicitor.
- 6 - Is your income being maximised? Are there any additional benefits that you are entitled to, or are there more efficient ways of structuring your income for Income Tax purposes? Again, your financial advisor will be able to help identify what can be done to streamline this.
- 7 - Can your debts and liabilities be minimised? Make sure that you know what all of the Direct Debits and Standing Orders from your accounts relate to and cancel any that are no longer needed – for example only 18% of paid gym goers use their membership regularly! Are there cheaper suppliers available for your utility bills, or could your mortgage payments be reduced by moving to a different rate or re-mortgaging? Are there any other regular payments that could be reduced or cut out? Are you entitled to any additional assistance, eg discounts for Council Tax if you live alone? Your financial advisor will be able to assist you with these decisions, but there is
also a lot of helpful advice out there on sites such as moneysavingexpert.com
- 8 - If after the payment of all of your expenses each month you have any surplus, that’s fantastic - but what are you going to do with it? Speak to your financial advisor about your options, for example whether you would want to invest in an ISA (where you can invest up to £15,240 this year), increase your pension contributions (up to £40,000 this year), make gifts of money to loved ones or charity, or simply keep a buffer for future uncertainties.
- 9 - Make sure you have a Will in place. A Will allows you to control who would inherit your estate after your death, as well as saving time, money and stress for those you leave behind. If you do have a Will, make sure it does what you want it to do efficiently, protecting your estate over the long-term. If you don’t have a Will in place, your estate will be divided in accordance with the laws of succession which may not match your wishes. In addition, further insurance premiums may have to be paid to reflect the fact that a Will was not made. If you don’t already have one in place or if you are unsure whether your current Will meets your needs, make sure you speak to your solicitor. We offer a free Will review service, so if you're not certain we can check this for you.
- 10 - Do you have a Power of Attorney? A Power of Attorney allows you to nominate somebody to help you make financial and/or welfare decisions in the future, should you be unable to make these for yourself. If you were to lose the ability to make decisions in the future through illness or incapacity, having a Power of Attorney in place will save time and stress, as well as legal fees. In addition - and most importantly - it gives you control over who would assist you, rather than allowing a court to decide who should make decisions on your behalf. Speak to your solicitor to find out more these important documents.
Set yourself the challenge of spring cleaning your finances - not only will you feel better about them, but come 2017 you will find yourself in a much stronger position!
If you'd like more information on any aspects of your legal planning from one of our legal experts, or to be put in touch with a financial advisor, get in touch - email us or call your nearest office today.