5 practical things to consider when structuring your legacy

Have you thought about how you’d like to divide your assets when you pass away?

If you have family, then you’ve probably considered splitting your wealth between children and grandchildren when you die. However, recent research published in Money Age suggests that only 55% of UK adults would split their wealth equally among their children.

The remainder say they would consider factors such as providing additional help for the least successful child or that they would take into account money and gifts already given.

Deciding how to structure your will to split your assets in the way you want can be tricky. So, here are five things to think about when deciding on how to structure your legacy.

1. Make a list of the people you want to benefit

Your first step when drawing up your will should be to make a list of everyone who you would like to benefit from your estate.

You might include:

  • Your spouse, civil partner, or partner
  • Children and grandchildren
  • Other family members
  • Friends

You may also want to bequeath some money to a charity or charities (more about this below).

2. Decide who gets what

Once you have made a list of the people you would like to benefit, you need to consider “who gets what”. Assets you may want to distribute could include:

  • Savings
  • Investments such as shares, bonds, or funds
  • Pensions
  • Any interest you have in a business
  • Property
  • Valuable objects such as jewellery and artwork
  • Sentimental items you would like to gift to a particular individual.

Remember that some of these items may fluctuate in value between making your will and your death.

3. Decide on the type of bequest

Once you have decided how to split your assets, you need to decide on the specific type of bequest you want to make. There are seven common types of bequest.

  • A specific bequest is a gift of a particular item or sum of money, which is given to a specified recipient. Example: “I leave my engagement ring to my daughter, Chloe. I leave £25,000 to my grandson, Jack, and my BP shares to my sister, Rachel.”
  • A demonstrative bequest is a gift of money that is to be paid when a specific item is sold. Example: “I leave my daughter, Courtney, the proceeds from the sale of my Norfolk holiday home.”
  • A reversionary bequest sets out who is next in line to get a gift, if the original beneficiary dies before you do. Example: “I leave my wedding ring to my aunt Janine, but if she predeceases me, I leave it to her daughter.”
  • A general bequest is sum of money you gift to a specific recipient. Example: “I leave £10,000 each to my grandchildren, Olivia and Faith.”
  • A conditional bequest requires the beneficiary to meet certain conditions before they receive the assets. For example, a condition might include getting married or going to university. Example: “I leave my son £25,000, providing he uses the money as the deposit for a property.”
  • A residual bequest wraps up the remaining value of your estate, after you have made all the other bequests. Example: “I leave the remainder of my estate to my civil partner.”

You can also make a charitable bequest, which we’ll consider now.

4. Don’t forget charity

As well as leaving gifts to loved ones, you can also donate money or assets to a charity, political party, or any other organisation.

Giving money to a charity that means something to you gives you the chance to have a real and lasting impact on the work that your chosen charity can do.

In addition, money gifted to charity does not count as part of your estate for Inheritance Tax (IHT) purposes. Furthermore, if you donate more than 10% of your estate’s net value to charity, the rate of IHT could reduce from 40% to 36%.

5. Pass along your values

All the above points have considered how you will distribute material assets such as cash and property. However, your legacy can be much more than this.

For many, the definition of “leaving a legacy” applies specifically to the next generation. If you have children, consider the example you’re setting for them. For example, if you pass on good financial habits or an altruistic approach to wealth then this may be as beneficial in the long term as shares or property.

Even if you don’t have children, you can still pass your values to younger generations. Think about volunteering to coach youth sports or offer education sessions to local youth groups to improve financial literacy.

Get in touch

If you want to consider the most productive and tax-efficient ways to leave a legacy, we can help. Please email or call 01454 416653 to find out more.

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