74% of financial advice from social media leads to an “undesired outcome”

There’s an abundance of unregulated financial advice available, and research suggests it could harm your security and long-term plans. Whether you receive advice through social media or follow the financial decisions of friends, you could take more risk than is appropriate or miss out on opportunities.

Read on to discover some of the potential perils of taking unregulated financial advice.

Almost 14% of Brits use social media for financial guidance

Social media has become an important part of daily life for many. Indeed, it’s estimated that in 2022, 4.59 billion people used social media worldwide. So, it’s perhaps unsurprising that a growing number of people are seeking financial advice on social media platforms.

According to a study from Capital One, 13.7% of Brits use social media as a primary resource for financial guidance. Interestingly, men were twice as likely to use social media platforms when seeking financial advice.

While social media can be informative and may contain advice from experts, the research suggests it may be more likely to harm your wealth.

In fact, almost three-quarters (74%) of people who have taken financial guidance from social media lost money or experienced an “undesired outcome”, such as harming their credit score.

Social media isn’t the only place you’ll come across unregulated financial advice either. You might also speak to friends and family, hear advice in the media, or read blogs that offer guidance. So, it can be difficult to avoid unregulated advice, but recognising when it could harm your finances may be important.

4 reasons you may choose to avoid unregulated financial advice

1. You might not know whether they’re qualified or experienced

The Capital One research found that 30% of survey participants said qualifications were a sign of trustworthiness.

The Financial Conduct Authority (FCA) requires all regulated financial advisers to have the relevant qualifications. This means you can rest assured that your finances are in safe hands.

If you choose to take advice from social media or other unregulated sources, it can be difficult to assess the qualifications and experience that the person has. Indeed, the Capital One research found that 80% of financial content on YouTube was made by someone with no qualifications.

2. You’re not protected if something goes wrong

Taking regulated financial advice means you could be protected by the FCA if something goes wrong. All regulated financial advisers will have internal complaints handling procedures and, if you need to, you can approach the regulator.

In contrast, if you’ve taken unregulated financial advice, it might be difficult to hold the individual or firm accountable or get justice if you encounter a problem. For example, you might not receive compensation if you were given inappropriate advice or mis-sold an investment.

3. The advice may not be tailored to you

Watching a quick social media video might seem like a simple way to receive financial advice, but it’s important to note it hasn’t been tailored to you. As needs and goals can vary hugely between people, a one-size-fits-all approach could lead to some acting on advice that isn’t right for them.

Similarly, a well-meaning family member might offer investment advice that suits their needs, but that doesn’t mean it’s the right solution for you. A host of factors might affect your investment decisions, from your investment time frame to the other assets you hold.

Despite this, almost 20% of people told Capital One that their friends and family are their primary source of financial information.

Working with a regulated financial adviser means you have an opportunity to talk about your aspirations, concerns and wider finances to create a plan that’s tailored to you.

4. You could increase the risk of falling victim to a scam

It can be difficult to check the credentials of online personas. So, if you’re taking advice from online sources, you could be more likely to be targeted by a scammer.

The Annual Fraud Report 2024 from UK Finance also notes that scammers are increasingly using social media to connect with victims and gather information. For example, the report states that adverts on social media are “used heavily in investment scams”.

When seeking financial advice, you can use the FCA’s Financial Services Register to find the details of legitimate, regulated firms.

Contact us to talk about your finances

As regulated financial advisers, you can have confidence in the guidance we provide. If you’d like to talk about your financial plan, please get in touch.

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Want to support your children through university? Here’s what you may want to consider

Millions of students across the UK are preparing to head to university and pursue their educational goals. As a parent, you may feel proud as you help them pack up their belongings and move into their own space for the first time. Yet, you might also be worried about how they’ll cope financially or repay the student loans they’re taking out. 

Figures from the House of Commons Library show there were 2.86 million students in the UK in 2021/22. Around 550,000 applications were accepted for full-time undergraduate places through UCAS in 2023. 

If your child was among them, read on to find out what you need to know about supporting them through university.  

The average student will graduate with debt of £43,700 

While going to university could broaden career prospects, you might worry about the financial implications of borrowing money to pursue further education.   

Many students will take out loans to cover tuition fees, which are a maximum of £9,250 a year in England in 2024/25. With the average course lasting three years, that means graduating with debt of £27,750. 

In addition, students may take out a maintenance loan to help with living costs while they study. Rent alone can add up to a substantial amount. Indeed, according to the BBC, in 2023/24, the average student outside of London and Edinburgh paid £7,475 in rent for the academic year. 

How much your child can borrow through a maintenance loan will depend on a range of factors, including where they’ll be studying, if they’ll be moving out, and your household income.  

Official figures show that the average student going to university in 2024 is expected to graduate with debt of £43,700. The government expects around 65% of these students to repay their student loans in full during their lifetime.  

With such a large figure, you may be tempted to offer an alternative to student loans. However, they work differently from traditional loans, so using your money to replace a student loan might not be the best way to support your child.  

“Plan 5” students will make student loan repayments once they earn £25,000 a year 

The way student loans work often means they can be viewed like a graduate tax rather than a traditional loan.  

Students starting university in 2024 will take out “Plan 5” loans, which launched in 2023. 

Under a Plan 5 loan, your child won’t need to make repayments until they’re earning £25,000 a year. If after graduating, they’re unemployed or are a low earner, they wouldn’t need to make any student loan repayments. The repayment threshold is frozen until 2027, after this point it’s expected to increase with inflation.  

Once your child earns more than £25,000, 9% of their earnings above the threshold will be used to repay their student loan. So, a graduate earning £35,000 would make student loan repayments of £900 a year. If your child hasn’t repaid the loan within 40 years, it is automatically wiped.  

For employees, repayments are automatically removed via payroll, just like Income Tax and National Insurance deductions.  

Interest is added to the loan at the rate of inflation, as measured by the Retail Prices Index (RPI).  

So, while you might be worried about how your child will repay their student loan, it’s manageable for most graduates.  

The average student maintenance loan falls short by £582 a month 

The rising cost of living has placed pressure on students’ day-to-day finances. As a parent, lending financial support to cover living expenses might prove more useful than covering tuition fees. 

According to Save the Student, in 2023, the average student faced a financial shortfall of £582 a month as the maintenance loan they were entitled to didn’t cover their living costs. Indeed, monthly expenses increased by 17% to £1,078 in 2023 when compared to a year earlier. 

It means some students had to make difficult choices about where to cut back. The survey found that a fifth of students often skip meals to save money.  

With 4 in 5 students worried about how they’ll make ends meet, regular financial support from parents throughout their education could make a huge difference. More than half of students said financial concerns harmed their mental health and 30% stated their grades suffered as a result. 

So, if you’re in a position to, you might want to consider how you could help your child manage their budget and ease some of the financial stress they may experience as a student.  

Contact us to make supporting your child part of your financial plan 

If your child will be going to university soon and you want to update your financial plan to offer them support while they study, please contact us. We’ll work with you to adjust your plan to reflect your short- and long-term priorities.  

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

5 practical questions to consider when you’re naming a Lasting Power of Attorney

Who you choose to act on your behalf if you lose mental capacity is an important decision. You want to select someone you trust and you feel confident could act in your best interest should you need them to. So, read on to discover five practical questions you might want to answer when you’re setting up a Lasting Power of Attorney (LPA). 

An LPA gives someone you trust the ability to make decisions on your behalf if you’re no longer able to. For example, they could take on this role if you’ve been involved in an accident or suffer from an illness that means you don’t have the mental capacity to handle your affairs. 

There are two types of LPA: 

· Health and welfare LPA, which would cover decisions like your medical care, whether to continue life-sustaining treatment, moving into a care home, and your daily routine

· Property and financial affairs LPA, which would cover decisions like paying your bills, managing your bank account or other assets, and selling your home. 

You should consider naming both types of LPA. They could provide you with security and ensure someone is acting on your behalf if you’re in a vulnerable position. 

According to FTAdviser, the number of LPAs registered in the last quarter of 2023 jumped by 37% when compared to a year earlier and marked the first time registrations exceeded a million. 

Yet, a separate study from Just Group also suggests that millions of families could be unable to act on behalf of their loved ones if something happened to them. Indeed, it’s estimated that 59% of over-75s haven’t arranged an LPA – the equivalent of 3.4 million people. 

If you don’t have an LPA set up, someone wishing to act on your behalf may need to apply to the Court of Protection to be appointed as your “deputy”. This could mean someone you wouldn’t choose is given the responsibility of handling your affairs.  

In addition, going through the Court of Protection can be a costly and lengthy process. It might place unnecessary stress on your loved ones at an already difficult time and could mean your affairs are left unattended for months. For instance, it may mean that you don’t have the support you need at home, such as care services, or that bills go unpaid.  

What to consider when choosing your Lasting Power of Attorney 

Your LPA must be someone who is aged 18 or older. Often, people choose family members as their LPA, but you might also select a trusted friend or even a professional, such as a solicitor, to act on your behalf.  

These five practical questions could help you decide who to name as your LPA. 

1. How many Lasting Powers of Attorney will you name? 

You can select just one LPA, but you can also choose several people to act on your behalf. Multiple LPAs can be useful and help relieve some of the pressure they might feel if they need to make decisions for you. For example, if you have two children, you might choose to name them both so they can share the responsibility.  

Even if you choose a single LPA, you may also want to name a replacement in case your first choice cannot fulfil their role. 

2. Who do you trust to act on your behalf? 

One of the first questions you’ll often want to consider is who you trust to make decisions on your behalf. An attorney will potentially have a lot of power over your life and financial affairs. So, it’s important you feel comfortable giving them this responsibility and are confident they’ll act in your best interests.  

If you have multiple LPAs, it might be important to consider how well they’ll work together. Conflicts arising could harm your wellbeing and mean decisions are delayed.   

3. Who has the right skills to act as a Lasting Power of Attorney?  

Next, you may want to think about whether the people you’d choose as an LPA have the right skills for the role. You might want to consider how they handle their affairs – are they generally organised and make decisions that you agree with?  

4. Would your Lasting Power of Attorney be comfortable making large decisions on your behalf?  

Becoming an LPA can be a lot of responsibility, which some people might not be comfortable with. 

Having a conversation with the person or people you’d prefer to act on your behalf can be valuable. It could provide an opportunity to talk about what your wishes would be, such as your views on life-sustaining treatment, and ensure they’d be confident making potentially difficult decisions for you.   

5. Will your attorneys be able to make decisions independently?  

Finally, if you’ll be naming more than one LPA, you’ll need to decide if they can make decisions independently or must act together.  

Your LPA will state whether they must make decisions “jointly”, meaning all attorneys must agree, or “jointly and severally”, which means they could act independently. Being able to act severally might be useful if decisions need to be made urgently, such as those relating to medical treatment.  

You can specify which decisions you’d like them to make together. For example, you might state they can handle tasks like managing your bills severally, but when it comes to selling property, they must make it jointly.  

Contact us to make a Lasting Power of Attorney part of your estate plan 

Naming an LPA can form part of your wider estate plan that considers how to manage your wealth later in life and when you pass away. If you’d like help creating an estate plan, please contact us. 

As your financial planner, we may also understand your goals and what you’d like your LPA to consider when making financial decisions for you. We could offer support and guidance if they need to act on your behalf. 

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate estate planning or Lasting Powers of Attorney.

Inheritance Tax: 5 shrewd strategies for reducing a potential bill

If you take a proactive approach to managing your wealth, you could reduce how much Inheritance Tax (IHT) your estate may be liable for when you pass away.  

Last month, you read about what IHT is and when estates become liable to pay it. Now, read on to discover some of the shrewd strategies you could use to reduce a potential IHT bill. 

Around 1 in 22 estates are liable for Inheritance Tax 

The latest HMRC figures show that around 1 in 22 estates are liable for IHT. In fact, in 2021/22, 4.39% of deaths resulted in an IHT charge. However, frozen IHT thresholds mean the portion of estates liable for IHT is slowly rising.  

While only a small proportion of estates face an IHT bill, the standard IHT rate of 40% means it can lead to a sizeable amount going to HMRC rather than your beneficiaries. Indeed, according to the Office for Budget Responsibility, HMRC collected £7.1 billion through IHT in 2022/23. The organisation expects the figure to reach £9.7 billion in 2028/29. 

So, if your estate could exceed the nil-rate band, which is £325,000 in 2024/25, you might want to consider these steps to reduce a potential IHT bill. 

1. Write or review your will 

A will is one of the key steps you can take to ensure your assets are distributed according to your wishes. Your will can also be used to manage IHT liability by distributing your assets in a way that allows you to use allowances. 

For example, the residence nil-rate band could increase how much you’re able to pass on tax-efficiently if you leave your main home to children or grandchildren. In 2024/25, the residence nil-rate band is £175,000, so it could significantly boost the amount you’re able to pass on before your estate needs to pay IHT.  

Yet, according to a FTAdviser report, a third of adults aged 55 or over have not made a will. 

If you already have a will in place, reviewing it may be worthwhile. You might find opportunities to reduce your estate’s IHT liability or that your wishes have changed.

It’s often a good idea to check your will every five years or following major life events, such as getting married, welcoming children, or relationships breaking down.  

2. Gift assets during your lifetime 

Giving away some of your wealth during your lifetime might bring the value of your estate under IHT thresholds or reduce the overall bill. It could also be useful for your loved ones, who may benefit more from financial support now compared to later in life.  

Some gifts may be considered immediately outside of your estate for IHT purposes, including: 

· Up to £3,000 in 2024/25 known as the “annual exemption”

· Small gifts of up to £250 to each person, so long as they have not benefited from another allowance

· Wedding gifts of up to £1,000, rising to £2,500 for your grandchildren or great-grandchildren and £5,000 for your child 

· Regular gifts that you make from your income that do not affect your ability to meet your usual living costs. For example, you might pay rent for your child or contribute to the savings account of your grandchild. It’s important these gifts are regular and it’s often a good idea to keep a record of them.  

However, other gifts may be known as a “potentially exempt transfer” (PET) and could be included in IHT calculations for up to seven years after they were received. 

You might also need to consider how gifting could affect your long-term financial security. 

If you want to gift assets to your loved ones during your lifetime, making it part of your financial plan could offer peace of mind. We may be able to help you understand how gifting will affect your wealth in the future and how to do so tax-efficiently.  

3. Use your pension to pass on wealth 

For IHT purposes, your pension usually sits outside your estate. As a result, it might provide a valuable way to pass on assets. According to a PensionBee survey, almost two-thirds of Brits were unaware of this, so your pension might be an option you’ve overlooked when considering IHT. 

Choosing to use other assets to fund your retirement could help you pass on more to your loved ones through your pension. Considering your beneficiaries when you’re creating a retirement plan could help you decide which option is right for your goals. 

While pensions aren’t normally liable for IHT, your beneficiary may need to consider Income Tax when accessing funds held in an inherited pension in some circumstances.  

Your pension isn’t typically covered by your will. Instead, you can complete an expression of wish form to inform your pension provider who you’d like to receive it when you pass away. 

4. Place assets in a trust 

Provided certain conditions are met, assets that are placed in trust no longer belong to you. So, they normally won’t be included when calculating an IHT bill.  

A trust is a legal arrangement that holds assets for the benefit of another person. As the benefactor, you can set out who will benefit from the assets and under what circumstances, which can give you greater control when compared to gifting or leaving an inheritance. In some cases, you may still benefit from the assets held in a trust, such as receiving the dividends from investments.  

You can also name a trustee, who would be responsible for managing the trust in line with your wishes and for the benefit of the beneficiaries. 

There are several different types of trusts and it’s important it’s set up correctly to ensure it meets your needs, including reducing a potential IHT bill if that’s one of your priorities. Taking legal advice might be valuable when creating a trust. 

In addition, it may be difficult, and sometimes impossible, to reverse decisions related to a trust. As a result, you should think carefully about which assets you place in a trust and how your decisions align with your wider financial plan. Please arrange a meeting with us if you’d like to talk about putting some of your wealth into a trust.  

5. Take out life insurance  

Life insurance isn’t a way to reduce your estate’s IHT liability. However, it could provide a useful way for your family to pay the bill. 

Whole of life insurance cover would pay out a lump sum to your beneficiaries when you pass away. They could then use this payout to cover the IHT bill, so they wouldn’t need to consider how to use their inheritance to pay the cost. This option might ease the stress your loved ones are dealing with at a time when they’re grieving or handling your affairs.  

It’s important to note that you’ll need to pay regular premiums to maintain life insurance coverage. The cost of life insurance can vary depending on a range of factors, from the size of the eventual payout to your health.  

You might want to consider using a trust to hold the life insurance. Otherwise, the payout could be added to the value of your estate and increase the IHT that is due.

Legal advice may be useful when setting up a trust, which can be complex. 

Contact us to talk about your Inheritance Tax strategy  

There might be other ways you could reduce a potential IHT bill too. If you have any questions about IHT or your wider financial plan, please contact us. 

Next month, read our blog to discover how IHT in the UK compares to other countries and proposals to reform the tax. 

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, trusts or Inheritance Tax planning.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Investment market update: August 2024

August was a rollercoaster month for investors, with the global stock market experiencing significant volatility. Read on to find out what may have affected your investments.

Many market indices saw sharp falls early in August sparked by fears that the US is on track for a recession. However, investors are likely to have experienced some recovery in the weeks that followed.

On 16 August, global stock markets boasted the best week of 2024 – the MSCI main index of world stocks was up 3.5% over the week.

UK

There was positive news from the Office for National Statistics, which reported the UK economy grew by 0.6% in the second quarter of 2024. The figure lent further weight to claims that the UK is leaving the shallow recession at the end of 2023 behind.

However, the data showed that GDP per head is 0.1% lower in real terms than it was in the second quarter of 2023. This measure is often used as a broad barometer for living standards and economic wellbeing.

Despite this, the UK is set to be the third-fastest growing economy in the G7, behind only Japan and the US.

The Bank of England (BoE) also had an optimistic outlook. The Bank more than doubled its growth forecast for 2024 to 1.25%. It also decided at the start of August to cut the base interest rate for the first time since the pandemic to 5%.

Official data shows inflation increased to 2.2% in the 12 months to July 2024. It’s the first time inflation has increased since December 2023, but it wasn’t as sharp as some economists were expecting.

With chancellor Rachel Reeves set to deliver her first Budget on 30 October 2024, news that public borrowing soared could place pressure on her plans.

Public borrowing hit £3.1 billion in July 2024 – £1.8 billion more than in July 2023. Worryingly, the Office for Budget Responsibility previously estimated the government would only need to borrow £100 million. The news led to speculation that taxes will be hiked and spending plans cut to plug the black hole.

Like many other markets, the UK experienced volatility at the start of August. On 5 August, the FTSE 100 – an index of the 100 largest companies listed on the London Stock Exchange – fell by 2%. It did start to recover the following day with a modest 0.23% rise.

There was good news for Rolls-Royce shareholders this month. The company announced it would pay dividends for the first time since the pandemic, as underlying profit is expected to be higher than previously estimated thanks to a turnaround plan. The announcement led to shares rising by almost 10%.

Interestingly, the High Pay Centre found that FTSE 100 chief executive pay reached a record high. The median pay in 2023 was £4.19 million. For the second year, AstraZeneca chief executive Pascal Soriot topped the list with pay of £16.85 million.

Europe

The S&P Purchasing Managers’ Index (PMI) for the eurozone indicates the bloc is growing. However, Dr Cyrus de la Rubia, the chief economist at Hamburg Commercial Bank, warned it was at a “snail’s pace”.

Rubia also noted that the eurozone has benefited from several large events so far this year, including the European Football Championship in Germany, the Paris Olympics, and Taylor Swift concerts. So, a slowdown could be experienced in the coming months.

Eurostat data shows unemployment increased to 6.5% in June 2024. Rising unemployment could signal that businesses aren’t confident about the future.

Similar to the UK, European stock markets experienced volatility early in August. The Stoxx Europe 600 index tumbled 2.2% on 5 August but moved back into the red the following day. 

US

US job data sparked market volatility when figures from the Bureau of Labor showed unemployment increased to 4.3% in July 2023 and only 114,000 new jobs were created – far fewer than the 175,000 economists had anticipated. Coupled with poor earnings from some key technology businesses, stock markets fell.

On 2 August, technology-focused index Nasdaq fell by around 10% from its peak amid concerns that the US may enter a recession by the end of this year. Indeed, JP Morgan believes there’s a 1 in 3 chance the US will fall into a recession in 2024.

When markets reopened on 5 August, they sunk deeper into the red, with the Dow Jones falling by 2.8%, the S&P 500 tumbling by 4.2%, and the Nasdaq declining by 6.2%.

When Wall Street started to rally on 7 August, it was technology stocks that led the way. Salesforce saw its stocks rise by 3%, while Amazon (2.5%), Apple (2.27%) and Microsoft (2.2%) all gained too. The rally wasn’t universal though – Airbnb’s shares dropped by 14% as demand fell in the US and it missed profit expectations for the second quarter of 2024.

While gains were made, the Guardian reported that an estimated $6.4 trillion (£4.88 trillion) was erased from global stock markets in the three weeks to 7 August. Goldman Sachs also warned that the stock market correction hadn’t gone far enough.

There was some good news when PMI data indicated the service sector had increased “markedly” in July 2024, which could ease some concerns about an impending recession.

Asia

US recession fears were felt around the world.

Japan’s Nikkei index fell by 5.8% on 2 August and then suffered its worst day since 1987 on 5 August when it closed more than 12% down, while the broader Topix index experienced a similar fall. The indices bounced back, with the Nikkei’s value rising by more than 10% a day later.

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Guide: 5 insightful lessons you could learn from the world’s most successful investors

Even for professional investors, consistently delivering above-average market returns on investments is challenging. Those who have delivered high returns over a long time frame are remembered among the world’s greatest investors.

While you may not have the same resources that a professional investor may have at their disposal, you could learn valuable lessons from their work. Renowned investors might have unique philosophies and strategies, and sometimes they share their market wisdom.

This useful guide covers some practical lessons you can learn, including:

● Learn the value of investing from Warren Buffett

● Take the time to understand your investments like Peter Lynch

● Be prepared for the ups and downs of the investment market like John Templeton

● Embrace diversification like Thomas Rowe Price Jr

● Include a margin of safety like Benjamin Graham.

Download your copy of ‘5 insightful lessons you could learn from the world’s most successful investors’ now to discover investment lessons that could guide your decisions.

If you’d like to talk to us about your investment portfolio, please get in touch.

Two-thirds of UK adults don’t have a will. Here’s how it could affect your legacy

Failing to set out your wishes in a will could mean your assets aren’t passed on to the loved ones you’d like to benefit from your estate. As a result, this could have a significant effect on your legacy.

A will is one of the main ways to ensure your assets are passed on to your loved ones according to your wishes. So, if you don’t have a will in place, what will happen?

Intestacy rules are applied if you pass away without a will

If you pass away without a valid will, also known as “intestate”, the way your estate will be distributed will follow strict rules, which could be very different from your wishes.

In England and Wales, if you’re married with no children, everything will go to your spouse or civil partner. If you’re married with children, your spouse or civil partner will inherit:

· Your personal possessions

· The first £322,000 of your estate, and

· Half of your remaining estate, with the other half being shared equally among your children.

If you’re not married and have children, your entire estate would be divided equally between your children.

If you’re not married and don’t have any children, your estate would be shared equally among one of the following groups of people in this order:

· Parents

· Siblings, or nieces or nephews if your siblings have passed away

· Grandparents

· Aunts and uncles.

Finally, if no living relative can be found, your estate will pass to the Crown. Most of these funds go to the Treasury. According to the BBC, as of November 2023, there were more than 6,000 people on the government’s list of unclaimed estates.

As you can see, intestacy rules might mean some family members or friends who you’d like to benefit from your estate are overlooked. It’s not just about wealth either, as you may have sentimental items you want to go to a particular person. Perhaps you’d like your granddaughter to inherit your jewellery, or pass on your record collection to a music-loving nephew.

Intestacy rules also don’t consider whether you’d like a portion of your estate to go to organisations or charities you might wish to support.

By not writing a will, you’re missing out on an opportunity to set out exactly who you’d like to benefit from your estate.

Despite this potential impact on your legacy, research from the IRN Legal Wills and Probate Consumer report suggests just 36% of UK adults have a will.

5 other practical reasons to write your will

Ensuring your assets are passed on to your intended beneficiaries isn’t the only reason to prioritise writing a will if you haven’t already. Here are five other practical reasons.

1. Name a guardian for your children

If you have children under the age of 18 or other dependants, you can use your will to name their appointed guardians if the worst should happen and you pass away. A guardian would take full responsibility for your children until they reach adulthood. If you have not named a guardian, the court will appoint one, who may not be the person you’d choose.

2. Set out your funeral wishes

While funeral wishes listed in a will aren’t legally binding, they can be very useful for your loved ones. Organising a funeral while grieving and putting affairs in order can be stressful, and your family may worry about making the “wrong” decision. Making a note of your preferences could provide much-appreciated guidance.

You might also decide to set money aside to pay for your funeral in your will too.

3. Potentially reduce an Inheritance Tax bill

If your estate exceeds the nil-rate band, which is £325,000 in 2024/25, it could be liable for Inheritance Tax (IHT). In some cases, your will could be used to potentially reduce the bill.

For example, if you leave your main home to your children or grandchildren, you’ll usually be able to use the additional residence nil-rate band, which in 2024/25 could increase the amount you can pass on before IHT is due by £175,000.

There are often other ways you can reduce an IHT bill. If you’d like to discuss estate planning that considers IHT, please contact us.

4. List the executor of your will

An executor is responsible for carrying out the instructions in your will and handling your estate. It can be a time-consuming task, and one that some loved ones may find difficult. So, you might want to take some time to consider who would be suited to the role and name them as the executor in your will. 

You can choose a family member or friend to be an executor. Alternatively, you may appoint a professional executor, such as a solicitor or accountant, which could be especially useful if your estate is large or complex.

5. State who you’d like to care for your pets

If you have pets, you can use your will to set out your wishes regarding their care, including who will look after them. While you can’t leave assets directly to your pets, you might want to set aside some money for the person who will care for them to cover the costs.

Understanding your estate could be valuable when you’re writing a will

If you need to write a will, understanding your estate could be a valuable place to start. Considering your assets and how the value of them might change during your lifetime could affect how you wish to pass them on.

Please get in touch to talk about your estate plan, from what you want to include in your will to how to mitigate a potential IHT bill.

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate estate planning, Inheritance Tax planning, or will writing.

3 fundamental questions to answer if you’re investing for children

Building a nest egg for your child or grandchild could give them a head start when they reach adulthood. It might allow them to pursue further education, get on the property ladder, or even enjoy a gap year. While saving is one option you might want to consider, investing for children could yield higher returns.

Investing could help the nest egg grow at a faster pace

When you’re putting money aside for a child, a savings account or even a piggy bank might come to mind first. Holding assets in cash can feel “safer” as it’s often easily accessible and it won’t be exposed to investment risk.

However, unless the savings earn interest at a higher rate than inflation, the value of the nest egg could fall in real terms.

Let’s say you added £20,000 to a savings account for your child in 2018. According to the Bank of England, over the next five years, inflation averaged 4.5% a year. So, if the savings didn’t earn almost £5,000 in interest during that period, the spending power has fallen.

Investing a nest egg does mean taking some risk. Yet, it could provide an opportunity for the earmarked money to grow at a faster pace than inflation.

If you want to invest for a child to give them a financial boost when they reach adulthood, here are three important questions to consider.

1. Is investing appropriate for your goals?

While investing has the potential to grow the nest egg at a faster pace, that doesn’t mean it’s automatically the right option.

In some circumstances, saving might be better suited to your goals. For instance, if your child is a teenager and plans to use the nest egg to pay for university, the shorter time frame could mean investing isn’t appropriate as you’re at greater risk of being affected by market volatility.

There’s no one-size-fits-all solution if you decide to invest either. So, considering how much risk you’re comfortable with and whether it suits your circumstances could help you make decisions that are right for you.

2. How should you invest to create a nest egg?

There’s more than one way to invest on behalf of a child. Here are some key options you might want to consider.

· Junior ISA

Like their adult counterparts, a Junior ISA (JISA) is a tax-efficient way to save or invest. If you hold investments in a JISA, the returns will not be liable for Capital Gains Tax (CGT). According to government statistics, of the 1.2 million JISAs that were subscribed to in 2021/22, 58% were investment accounts.

In the 2024/25 tax year, you can add up to £9,000 to a JISA.

However, you should keep in mind that the money cannot be accessed until the child turns 18. Once they reach adulthood, the JISA will convert into an adult ISA, and they’ll be able to use the nest egg how they wish. Discussing how you’d like them to use the money as they’re growing up could help them make wiser decisions.

· Trust

If you’d like to have more control over when and how the investments are used, placing them in a trust might be useful.

You can set out how the trust is to be run and the conditions of when it can be accessed. For example, you may state your child can take control of the assets when they’re 25, but they may also use a portion of the money before then to cover education expenses.

There are several different types of trust to choose from. Working with a solicitor may help you decide which option is right for you and reduce the chance of mistakes occurring when you’re setting up a trust.

· Pension

They might not have entered the world of work yet, but it’s not too soon to start thinking about your child’s long-term financial security.

In fact, due to the long investment time frame providing ample time for returns to compound, using a pension to invest could create a sizeable nest egg.

Those who don’t have an income, including children, can tax-efficiently add up to £2,880 to a pension in 2024/25. Contributions benefit from tax relief, so if you contributed the maximum amount, a total of £3,600 would be added to the pension.

According to calculations from interactive investor, if you contributed £2,880 to your child’s pension when they’re born, they’d have a nest egg of almost £72,000 60 years later, assuming average returns of 5% a year net of fees, without having to make any additional deposits.

Of course, your child wouldn’t be able to access the nest egg until they reach pension age. The pension age is currently 55, rising to 57 in 2028, and it’s likely to increase further during your child’s lifetime. The tax treatment of pensions is also subject to change.

3. Could the investment returns be liable for tax?

While it might seem strange to consider tax liability if you’re investing for a child, it could be an important factor.

Just like an adult, a child may have to pay Income Tax if their total income exceeds the Personal Allowance, which is £12,570 in 2024/25. In addition, if they earn more than £100 in interest in a single tax year from the money you have given them, you could become liable for tax on the interest earned too.

So, while it’s rare that children will pay Income Tax, it’s not impossible. As a result, you might consider using tax-efficient ways to invest, such as through a JISA or a pension.

Contact us to make your children or grandchildren part of your financial plan

Making your children or grandchildren part of your financial plan could help you reach your goal if you want to lend a helping hand. Whether you want to offer regular support or a one-off gift, a financial plan may help you identify the effect it might have on your finances, how to gift tax-efficiently and highlight other factors you may need to consider.

Please contact us to talk about how you could use your assets to help your loved ones.

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.