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trust in the assets you can control 01/03/2008 Months of mayhem on the global equity and money markets has made even the most affluent individuals wonder where to turn next, in search of a safe home for their wealth.
One of Birmingham's most experienced private client lawyers reckons now is the time - more than ever - for such high net-worth individuals to trust their advisers, rather than their instincts.
Keith Dudley, the partner who heads Martineau Johnson's private client group, advises some of Birmingham's best-known corporate dynasties and richest entrepreneurs.
His message to all is clear: "Plan even harder during the tough times."
Keith says the present volatility underlines the critical importance of maintaining a consistent approach to long-term financial planning; whether via investments, trusts or pension funds.
"If you have spent (say) the last 20 years planning the financial future of you and your family, this is not the time to suddenly switch your approach," he said.
Despite successive months of uncertainty, Keith says Martineau Johnson's private clients have continued to preserve their wealth via the traditional routes of trusts, pension funds and investment portfolios.
"To be honest, the credit crunch hasn't had a noticeable impact on such long-term planning. When you are looking ten, fifteen or maybe 20 years in the future, it is best to avoid being overly-influenced by short-term factors," he said.
However, there are some current issues which Keith says are causing affluent individuals to review their finances.
"Annuity rates are particularly poor at the moment, so people are simply drawing down income from their pension fund, and are in no hurry to consider purchasing their annuity," he said.
An increasingly popular technique of protecting the decades of wealth accumulated in a pension pot is the creation of a discretionary trust.
"A vehicle is established which has the surviving spouse, and perhaps also children, as beneficiaries," says Keith.
"If the pensioner does not survive till the age of 75 with the pension fund in tact the trust can be very beneficial in tax terms. It's certainly an approach which has become very attractive in recent months, as people focus on protecting the assets they have, and realise how flexible pension funds can be."
Keith says there is also a fast-narrowing window of opportunity for people to change the way their trust funds operate.
"At the moment, individuals are able to receive income from a trust fund established before 22nd March 2006 and which is taxed under the old rules. However, if they act by 5th October 2008, it is possible to transfer the interest to someone in their family, who is younger and will benefit from the tax advantages offered by the fund for longer.
"Anyone who has a life interest fund really needs to review how it operates, and who it might benefit before the legislation changes."
Keith highlights the falling value of the pound, against the euro and other European currencies, as another factor to consider in their current financial planning, particularly when considering buying overseas properties.
"For example, Spain has long been a very popular place for people to purchase retirement homes, and to invest in the wider property market," he said.
"However, we are now seeing that it is very difficult to sell properties in some areas of Spain. Currency fluctuations are making properties much more expensive for British buyers, inside the euro-zone and elsewhere."
Keith also counsels that - as always - no step in anyone's long-term financial planning should be made without careful thought and consideration.
"There can be a temptation during fraught times to see a potential opportunity, and to think that swift action is vital. The opposite is true. Take a breath, think twice and always make sure you have taken the right advice. It could save you from making serious and costly mistakes."
For further information please contact Keith Dudley on
keith.dudley@martineau-uk.com |
