What is Intergenerational Planning?

What is Intergenerational Planning?

Many of you will be thinking of your children’s futures alongside your own and looking for tax-efficient ways of creating a legacy.

However, as we live longer, there is often more than one generation in any one family. This means it’s worth considering how grandchildren and great grandchildren can also benefit from your estate.

This is what we mean by intergenerational planning

The standard inheritance tax rate is 40% of anything in your estate (property, possessions and money) over the £325,000 threshold. For example, if you leave behind an estate worth £500,000, the tax bill will be £70,000.

In 2018 the UK government made a record amount in inheritance tax receipts as it broke the £5billion mark for the first time.* With the right planning, you can significantly reduce your inheritance tax liability.

You can make use of tax allowances, use trusts and different types of investments, and you can also gift your money to reduce your wealth.

Trusts aren’t as complicated or costly as you may imagine, and you can still retain an element of control over your money. There are a number of trusts to choose from, from bare trusts to discounted gift trusts to loan trusts and gift trusts. The kind of trust you choose depends on what you want it to do.

However, intergenerational planning isn’t just about inheritance tax planning

With increased longevity and social change, many people are now considering ways of using their wealth to support their family during their lifetimes.

Whether it’s helping with school fees, paying for a wedding or helping grandchildren get on the property ladder, intergenerational planning is about ensuring the right amount of money goes to the right people at the right time.

Your property is another thing to consider, such as transferring it into your children’s name and paying a rent, or selling your house and gifting your children the proceeds.

The best thing to do is to start this kind of planning early

We can help you understand your options, prioritise, and to see how you might spread your wealth throughout your family in the best way possible.

We can also help you to broach the topic with your loved ones. It’s often important for families to be able to discuss their own opinions and it helps them to feel more responsible in their role as an inheritor of the family wealth.

Ascot Wealth Management Limited is authorised and regulated by the Financial Conduct Authority reference 551744. Our registered office: Scotch Corner, London Road, Sunningdale, Ascot, Berkshire, SL5 0ER. Registered in England No. 7428363. www.ascotwm.com Unless otherwise stated, the information in this document was valid on 3rd February 2017. Not all the services and investments described are regulated by the Financial Conduct Authority (FCA). Tax, trust and company administration services are not authorised and regulated by the Financial Conduct Authority. The services described may not be suitable for all and you should seek appropriate advice. This document is not intended as an offer or solicitation for the purpose or sale of any financial instrument by Ascot Wealth Management Limited. The information and opinions expressed herein are considered valid at publication, but are subject to change without notice and their accuracy and completeness cannot be guaranteed. No part of this document may be reproduced in any manner without prior permission. © 2017 Ascot Wealth Management Ltd. Please note: This website uses cookies. To continue to use this website, you are giving consent to cookies being used. 

Good Debt Versus Bad Debt – Understanding The Grey Area

Good Debt Versus Bad Debt – Understanding The Grey Area

Debt is due for a rebrand. So often when we hear about debt in the news, it’s within the context of “bad debt” – households in over their heads with credit card bills and interest payments; students working three jobs to chip away at college loans; house-poor millennials saddled with mortgage payments because they tried to get in on the market before it moved even further from reach.

But not all debt is bad. There are ways to leverage it in order to open up economic opportunities that will advance your financial plan. The key is to learn how to talk about it and cut through the noise.

While mortgages, student loans and investing in your business are often classified as good debt, and cars, credit card debt and vacations are commonly seen as bad debt, it’s a bit more complicated than that. For instance, what if that car helps grow your business opportunities or what if you’re living beyond your means with the mortgage?

It’s time to re-calibrate the way we look at debt and see how it can be used to your advantage.

Understanding the grey area

We often look at the dividing line between the two as if it increases your net worth or has future value, it’s good debt. And if it drains your wealth and decreases your value, it’s bad debt. But this also negates the point that all debt comes at a cost and that cost of borrowing needs to be considered. Further to that, the cost of your debt should be considered in your financial plan.

Ask yourself: Are you borrowing money at the best possible rate and are you prepared if interest rates rise in the future? How will leveraging this debt improve your finances in the future? And what’s your response if things go awry?

Part of keeping good debt from turning into bad debt is stress-testing the different scenarios, knowing your comfort level, and developing a plan.

Using debt to your advantage

Our role as your financial planner is to set you up for the future, and part of that is managing debt. Together we can identify strategies that help you use debt to your advantage – from mapping out your cash flow and identify the debt problem areas to prioritising expensive delinquent accounts over lower interest and less pertinent debts. Debt can be restructured into more beneficial vessels that allow you to draw equity or consolidate the amounts you owe.

Although this may work for some, others may encounter a different situation so it’s very important to speak to us or a professional adviser regarding your debt and how to manage it effectively. Debt can also have a negative impact on your credit score which I another reason to have a professional look into your unique situation.

So don’t let debt’s bad rep get in the way of a good strategy. Talk to us about how it can fit into your plan.

Ascot Wealth Management Limited is authorised and regulated by the Financial Conduct Authority reference 551744. Our registered office: Scotch Corner, London Road, Sunningdale, Ascot, Berkshire, SL5 0ER. Registered in England No. 7428363. www.ascotwm.com Unless otherwise stated, the information in this document was valid on 3rd February 2017. Not all the services and investments described are regulated by the Financial Conduct Authority (FCA). Tax, trust and company administration services are not authorised and regulated by the Financial Conduct Authority. The services described may not be suitable for all and you should seek appropriate advice. This document is not intended as an offer or solicitation for the purpose or sale of any financial instrument by Ascot Wealth Management Limited. The information and opinions expressed herein are considered valid at publication, but are subject to change without notice and their accuracy and completeness cannot be guaranteed. No part of this document may be reproduced in any manner without prior permission. © 2017 Ascot Wealth Management Ltd. Please note: This website uses cookies. To continue to use this website, you are giving consent to cookies being used. 

Your child turned 18 – what happens to their Child Trust Fund now?

Your child turned 18 - what happens to their Child Trust Fund now?

This month will see the first Child Trust Funds (CTFs) turn 18 and thus reaching maturity. This means that many 18-year olds, some of whom will be heading off to university, others potentially embarking on a gap year, are about to receive full, legal entitlement over their plans.

For those lucky enough to be born between 1 September 2002 and 2 January 2011 they were enrolled in a CTF, which has since been replaced with a Junior ISA (JISA). The CTF was set up by the government to kickstart good saving habits, with every account credited with up to £500.  Around 25% of these were automatically set up by HMRC if parents did not set up the account before the child’s first birthday. This has meant that there are currently 6 million young people across the UK with a CTF, however, research suggests that at least 1 million of them have either lost track or are not aware that they have one registered to their name. This means that you/your child could have a pot worth £1,000, or potentially even more if parents added additional contributions. If you think your child was entitled to a CTF they can track it here

What happens now?

If the legal owner does nothing then;

  • If it’s in a stocks & shares (investment) CTF, it’ll be converted to an adult stocks & shares ISA.
  • If it’s in a cash CTF, it’ll be converted to an adult cash ISA.

What can I do with the cash? 

As stated above, if the legal owner leaves the CTF as is, it will convert in to one of two ISAs. Ultimately the proceeds of the CTF are up to the decision of the legal owner. Here we suggest some options. 

  1. Put it towards a first home 

Consider opening a Lifetime ISA account. This is a special tax-free savings account which gives you a 25% bonus on up to £4,000 saved a year (so a max £1,000/year bonus). You can then use this towards buying your first home.

  1. Invest it for a future need.

As the CTF will automatically transfer into an ISA, consider making this a Stocks and Shares ISA and investing it

  1. Move it to a savings account. 

If you wish to access the funds within two years, place the funds into an instant access cash savings account. 

If you wish to discuss the best option regarding the proceeds of a Child Trust Fund, please contact your adviser. 

For expert advice book your free, no-obligation meeting today. 

Did you miss out on the Child Trust Fund? Why not open a Junior ISA for a loved one? You can start with as little as £10 a month. Junior ISAs attract no tax on the earnings up and you are now eligible to save up to £9,000 per year they are a great vehicle to start your young one’s savings journey. Contact your adviser today. 

Source: BBC

Ascot Wealth Management Limited is authorised and regulated by the Financial Conduct Authority reference 551744. Our registered office: Scotch Corner, London Road, Sunningdale, Ascot, Berkshire, SL5 0ER. Registered in England No. 7428363. www.ascotwm.com Unless otherwise stated, the information in this document was valid on 3rd February 2017. Not all the services and investments described are regulated by the Financial Conduct Authority (FCA). Tax, trust and company administration services are not authorised and regulated by the Financial Conduct Authority. The services described may not be suitable for all and you should seek appropriate advice. This document is not intended as an offer or solicitation for the purpose or sale of any financial instrument by Ascot Wealth Management Limited. The information and opinions expressed herein are considered valid at publication, but are subject to change without notice and their accuracy and completeness cannot be guaranteed. No part of this document may be reproduced in any manner without prior permission. © 2017 Ascot Wealth Management Ltd. Please note: This website uses cookies. To continue to use this website, you are giving consent to cookies being used. 

AWM Performance Monitor : August 2020

AWM Performance Monitor – August 2020

Note From The Managing Director.

The advisory portfolios had a strong August, all posting positive numbers in what was a muddling month for asset classes overall. Mid-month there was a lot to digest for investors with I would say the first signs of volatility coming back into the various markets for bonds, equities and commodities. This has split into September but comments will stay focused on this month’s overview.

The biggest battle we see currently is in the direction of inflation with mid-month deferrals of the second US stimulus bill looking like being the end of September at the earliest. This meant sell-offs in asset classes such as gold and inflation-protected bonds, Gold had reached a peak close to 2100 but has dropped and seems to be trading in a range of around 1950. We have held our overweight position as we still sit on the inflation risk fence that low long term inflation. I think this theme was somewhat reflected at month-end and I have a deeper view that as much as some sales chains, such as our own with video meetings have been officiated I see short to medium term issues with the supply of goods and this will likely lead to inflationary pressure. Just this week in the FT (Financial Times) there was a good example of this applied to a rabbit purchase. The journalist’s pet rabbit had died during the lockdown and she set out to replace it but could not find one due to the sudden demand for small pets. She ended up paying triple the standard amount to replace her furry friend. This theme resonated with me and this is why we will keep our gold overweight for the time being.  There was continued out-performance in many sectors for actively managed funds and this is something adopted into thinking in the Cape Berkshire equivalents. Early October will see the realignment of these AWM portfolios to their Cape Berkshire led equivalents, performance-wise there has not been too much difference Q3 to this point.

Positives on the month were the small and midcap UK positions we hold as part of our UK allocation. The FTSE had a torrid month finishing sub 6000, at a time the Nasdaq the US tech index was running away higher. The service-based nature of the UK economy has hurt our domestic recovery but there must come a point where there are some attractive fund or investment trust-based value plays. Either way, the Merion UK Smaller Companies fund up 6.68% was a real star performer on the month. Of other note was the resignation after a long period of governance of Prime Minister Abe in Japan which we will see the fallout in the coming months. We remain underweight Japan vs benchmark, not with mass negativity but as I always remind clients the overweight’s must be funded from somewhere. Of note, we again saw a good recovery of the Indian Alquity fund where like the UK mid and small caps outperformed.

Our next note will be our quarterly update where we will look further to BREXIT and the pending US election in quarter 4. Enjoy the month.

 

AWM Portfolio Performance

These tables simply indicate AWM’s portfolio’s over the stated time periods up to 31/08/2020.

Market Update

Yet another very encouraging month all portfolios showing a solid performance (on average +1.43% over the month). This is greater than both the FTSE100 (returning +1.12%) and the UK Government Gilt sector (returning -3.60%). As these two benchmarks are seen as opposite ends of the risk spectrum, this gives evidence that the AWM portfolios have generated considerable risk-adjusted returns for the month. 

Over a 3 month period, the advisory portfolios have returned between 5.58% and 7.77% (mean of 3.64%), largely outperforming their FTSE UK Private Investor benchmark counterparts. As I author this note, since the COVID-related portfolio lows of 23rd March, the portfolios have returned between 12.15% (AWM1) and 31.29%. This strong continuing performance beyond the initial recovery maintains our confidence in the management of the portfolios.

Click through to the performance graphs for longer-term overviews and versus world indices.

Best and Worst Performing Funds 

This table simply indicates a portion of the AWM’s chosen invested funds, which are either the best performing or worst performing, over the stated time periods up to 31/08/2020.

This information is correct and up to date as of 10/09/2020.

This Performance Monitor has been created from multiple sources as well as our own views and this should not be taken as investment advice. If you require financial advice then please contact us by email or phone so that you can speak to a qualified financial adviser. Any information provided/gathered will be subject to the General Data Protection Regulation (GDPR). You may be assured that we and any company associated with Ascot Wealth Management will treat all personal data and sensitive personal data and will not process it other than for a legitimate purpose.

Ascot Wealth Management Limited is authorised and regulated by the Financial Conduct Authority reference 551744. Our registered office: Scotch Corner, London Road, Sunningdale, Ascot, Berkshire, SL5 0ER. Registered in England No. 7428363. www.ascotwm.com Unless otherwise stated, the information in this document was valid on 3rd February 2017. Not all the services and investments described are regulated by the Financial Conduct Authority (FCA). Tax, trust and company administration services are not authorised and regulated by the Financial Conduct Authority. The services described may not be suitable for all and you should seek appropriate advice. This document is not intended as an offer or solicitation for the purpose or sale of any financial instrument by Ascot Wealth Management Limited. The information and opinions expressed herein are considered valid at publication, but are subject to change without notice and their accuracy and completeness cannot be guaranteed. No part of this document may be reproduced in any manner without prior permission. © 2017 Ascot Wealth Management Ltd. Please note: This website uses cookies. To continue to use this website, you are giving consent to cookies being used.