12 Days of Christmas

11 December, 2015
by: Cripps Pemberton Greenish

With 12 days left until Christmas,  we will be sharing daily seasonal advice to help you protect your assets.


A pre-nuptial agreement

A relationship breakdown can have a huge financial impact on your affairs. A pre-nuptial agreement, which will record how assets should be divided on the breakdown of a marriage, can be of great help in this respect. We understand that pre-nuptial agreements can have a reputation for being cold and a little heartless, but they can also be used to assist with managing your financial affairs during a healthy relationship. A well drafted agreement can provide clarity over particular assets that you may want to protect ownership of.


Two Wills

For two turtle doves, it’s important to make Wills, mainly so that you can choose who your assets will pass to you when you die. This will certainly reduce your family’s heartache and stress in dealing with your estate, and give you peace of mind that everything will be taken care of, in the way that you want it to. Not only this, but important tax efficient provisions can be written into your Will, which can help you protect the value of your assets for your future generations.


Three foreign Wills

Properties abroad? Depending on the country where your property is situated, it may be a good idea to make a Will in that country, alongside your English Will. For example, in some jurisdictions your property has to pass to a certain family member, which can sometimes be problematic depending on your family circumstances. Making a foreign Will could remedy this. But, be careful, if you already have an English Will, it may include a clause revoking all previous Wills, which could inadvertently cancel the overseas Will, or it could happen the other way round. If this happens, you should prepare a fresh will to reinstate the cancelled Will.


Four Lasting Powers of Attorney

Who do you think manages Santa Claus’s affairs while he is away over the Christmas period? If you have an LPA, you can appoint attorneys to manage your financial affairs, whether or not you have lost capacity. This is useful if you are away from the UK over a long period of time, or if you suddenly become unable to deal with your personal affairs. You can also have a health and care decisions LPA, where your attorneys can make decisions concerning your health and welfare when you might be unable to do so.


Five gold rings

Along with your Will, Cripps Pemberton Greenish can prepare you a letter of wishes to help your executors with the interpretation of your Will. The letter can record personal bequests to your loved ones, for example who you want to pass your precious jewellery to when you die, or who should inherit your treasured family heirlooms. The letter clarifies your wishes, and gives direct guidance to your executors, which can avoid unwanted family disputes.


Six classic cars

Unlike normal cars, some classic cars increase in value. Usually, when an asset increases in value and makes a profit at the point of sale, you are liable to pay capital gains tax which would be up to 28% on the profit. However, some classic cars do not attract capital gains tax making them a good “investment vehicle”. This is because some classic cars are classified as “wasting assets”, as the cars have a predicted life expectancy of 50 years or less.


Seven digital passwords

We use social media, email, image sharing and the “cloud” every day to communicate, and store photos and other information. We use the internet for personal banking and for dealing with our life administration. If you pass without noting down your passwords for such sites, precious memories can be lost forever. This can also have a commercial impact too. For example, if you are an entrepreneur, the resulting administrative disruption to your business could easily affect client relations, and have a wider impact on your business’s survival. Cripps Pemberton Greenish can advise on how to get round this without compromising security.


Eight Grandchildren’s trusts

A bare trust is a way to hold assets on behalf of a beneficiary. This is a popular trust model for grandparents wishing to provide for grandchildren who may not be old enough to receive the funds. The grandchildren can be allocated capital out of the trust before they turn 18, for example to help with school fees. At the age of 18, the grandchildren are granted control over the trust. For larger sums or to defer the age when control passes over, more complex trust arrangements are possible.


Nine pension pots

Are you contributing to a pension pot with your current employer, and have other pensions from previous employments? Let’s talk turkey: combining your pension pots into a self-invested pension plan (SIPP) can provide for your retirement in a tax efficient way. The SIPP will not attract capital gains or income tax, and the new pension reforms announced earlier this year means that you can nominate your children to receive the SIPP on your death.


Ten paintings hanging

Did you know that under the Conditional Exemption Incentive, some works of heritage art can be exempt from Inheritance Tax? The works are exempt on the condition that undertakings (such as taking care of the asset, and making the asset available for public viewing), are given to HMRC by the person who receives the gift.


Eleven lifetime gifts

Young or old, everyone enjoys giving and receiving gifts on Christmas Day. The good news is you have an annual exemption of £3,000. This means that as part of your lifetime Inheritance Tax planning, you can give away gifts of up to £3,000 per year, which will never become subject to Inheritance Tax. If unused, you can also carry over your leftover annual exemption from one tax year to the next, meaning that you could give away up to a maximum of £6,000.


Twelve woodland trees

Proof that money really does grow on trees! Buying a wood or a forest as an investment may not be an obvious choice, but if you have surplus capital, this investment may not be a bad idea. It can be sheltered from Inheritance Tax as a deferral relief for long term forestry. As house prices have increased, more development work has taken place creating a demand for timber. Inheritance Tax will only become chargeable when the timber has been felled and sold.