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Six Steps towards Wealth Preservation

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After a long and successful career, it is understandable for many people to want to safeguard the wealth they have carefully accumulated. Not only does this help enable you to achieve the lifestyle you want in retirement, but it also opens up the possibility of eventually passing on more to your loved ones in the form of an inheritance.

Everyone’s financial goals and circumstances are different. For some, their main objective might be to grow their wealth (which is common amongst younger investors). Others, however, might feel that they have broadly reached their desired level of wealth, and so it is more important to now start battening down the hatches to avoid unnecessary investment risks.

Regardless of your financial position and goals, it is important to consider discussing these with an independent financial adviser (such as ours here in Grantham) to ensure you have the best, most up-to-date information you need to make informed decisions about your wealth.

Here in this short guide, we’ll be offering six steps to think about when it comes to wealth accumulation. Please note that this content is for information purposes, and should not be taken as financial advice. To attain the latter, we recommend that you consult a financial planner.


#1 Critical Illness Cover

One of the key steps to preserving your wealth is to identify any potential threats to your income and address them. If you are currently employed, for instance, what would happen to your household income and wealth if you suddenly became seriously ill, leaving you unable to continue paid work?

Critical illness cover is a type of insurance designed to protect you and your family, in the unfortunate event that this occurs. Depending on the policy, you might be entitled to up to 80% of your pre-incapacity remuneration (assuming you meet its conditions).

This is an important option to consider with your financial adviser if you are looking to minimise the financial impact of potential, future critical illness.


#2 Life Insurance

Taking the above scenario one step further, what would be the financial impact on your household if you suddenly passed away? With an appropriate life insurance policy, you can provide a valuable lump sum to your surviving family in the tragic event that this happens.

A large lump sum in these circumstances cannot, of course, take away the emotional pain experienced by your family. However, it could take away an enormous amount of financial pressure – possibly even allowing your spouse to pay off the mortgage.

There are two main types of life insurance to discuss with your financial planner: “term life” (covering a fixed period) and “whole-of-life” (providing indefinite cover).


#3 Making a Will

If you want to preserve your wealth as much as possible for you and your loved ones, then it is likely that you have specific wishes about what should happen to it when you die. Without a will, however, your estate is likely to be dealt with under “intestacy” rules which might not distribute your assets as you would have wanted.

To address this, it is a good idea to consult a wills and probate specialist about creating a tailored, legally-binding will. There are, of course, “do-it-yourself” will options on the internet which offer a cheap solution. However, we recommend that you invest in a professional’s services to ensure that there is no ambiguity or loopholes in your will which could cause family disputes later on. Castlegate can make appropriate introductions (see below) so you can access such professional services with confidence.


#4 Power of Attorney

The above steps go a long way to help protect your wealth. However, there is also the possible scenario that, one day, you might not be able to (or want to) make independent decisions about your wealth. To protect your wealth in these circumstances, it is a good idea to consider setting up legal “Power of Attorney” to enable another trusted person to make these decisions for you.

Here at Castlegate, we work closely with Duncan & ToplisProbate Services to help with this area of financial planning, here in Grantham and the wider Lincolnshire area. They can also assist with crafting a bespoke will, suitable to your needs and wishes.


#5 Portfolio Planning

If your investment portfolio is currently geared towards a “growth” composition, then you will likely need to speak to a financial adviser about restructuring it to reflect your new wealth preservation goals.

For instance, it might be that your adviser recommends a reduction in the percentage of equities in your portfolio, replacing these with bonds and cash investments. Or, perhaps you need to redistribute your collection of equities themselves (i.e. away from emerging markets and more towards funds which focus on the more stable markets of the Western world).


#6 Inheritance Tax

Making a will is an important part of estate planning. However, it is unlikely to be enough to ensure that the maximum amount of your wealth is passed on to your family when you die. Inheritance tax is still a looming factor which you will need to address with your adviser.

For instance, in 2019-20 the inheritance tax threshold is £325,000. Above this limit, your assets are likely to be taxed at 40% unless you meet certain criteria which can raise your threshold. For instance, if you pass on your family home to direct descendants (i.e. children or grandchildren) then you can raise your threshold by an additional £125,000 in 2019-20.

We recommend consulting one of our financial planners here in Grantham or in your local area, to ensure you take maximum advantage of the allowances and reliefs on offer to you.

Get in touch today to arrange an initial exploratory consultation at our expense with one of our specialists here at Castlegate via 01476 591022 or