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How will you secure your legacy?

The Essential Guide to Estate Planning for Private Landlords

The rewards of property investing can be generous, but the challenges are undeniable. Let's look at the bigger picture.

Investing in property to let is a bold decision, whether it's a single residential let or a comprehensive mixed portfolio. The potential long-term rewards can be generous. But the day-to-day challenges are undeniable. As the landscape evolves, with more stringent mortgage lending criteria and onerous tax rules, let’s take a step back, look at the bigger picture, and ponder some critical questions.

Investing for the Long Term: Who and What Matters?

In my conversations with buy-to-let investors, I have found they generally have three main goals:

1. Providing for Present and Future: generating income for themselves and their families, both now and in their retirement years.
2. Building Security and Capital: The allure of investing in bricks and mortar lies in the security of long-term capital growth.
3. Creating a Legacy: The desire to leave behind a legacy that can benefit successive generations is a driving force for many investors.

Astute estate planning decisions are the lynchpin that secures these aims.

Addressing the Inheritance Tax Conundrum

If your overall assets, including the equity in your property portfolio, come in at under £325,000 (or £650,000 for a married couple), Inheritance Tax may not pose a challenge for you.

But if the equity in your portfolio exceeds these thresholds, then planning for Inheritance Tax is crucial to making sure your family will get the most benefit from your legacy. The default position is that your Inheritance Tax bill must be paid six months after your death, before your family can even get a Grant of Probate. There is some wriggle room for property-owners, in that the Inheritance Tax on properties can be paid in ten annual instalments, with interest of course. But that still requires your family to come up with the first ten percent of your liability before that six-month deadline, which can be a challenge.

There are things you can do to make things easier on your family, such as restructuring your portfolio, saving up money your family can use to pay the tax, or taking out life insurance against the liability.

The first step is to work out what your projected Inheritance Tax liability is likely to be. From there you can take suitable legal, accounting, and financial advice as to the best way of planning for your liability.

Preparing for Retirement and Beyond

Your property portfolio might serve as your future pension plan but remember that property management carries so many practical responsibilities, even if you; have employed a letting agent. As you age, the risk of health vulnerabilities increases, potentially hampering your ability to manage properties day-to-day. Pre-emptively making a Lasting Power of Attorney for Property and Financial Affairs can ensure that your interests are safeguarded should you become unable to manage your affairs.

Thoughtful Will Construction for the Future

If you intend that your portfolio will be the basis of your children’s and grandchildren’s future financial security, structuring your Will properly is a pivotal concern. Your choice of executor and the terms of you Will are crucial to the longevity and effectiveness of your legacy.

To ensure your wishes are honoured, it’s important to choose executors who share your values. Once you have a clear vision of how who you want to provide for and how, there is a wealth of tools and provisions you can include in your Will to make sure your vision is realised, and your legacy is protected. 

Where to Next?

Your journey as a private landlord is uniquely yours, and it’s essential that your estate plan is tailored to your specific goals and concerns. With careful planning and knowledgeable guidance, you can ensure your investment will be profitable and secure over the long term.

For specific advice about your portfolio and how to preserve it, feel free to reach out. We’re here to listen, understand and help you secure your family's future.

"We decided to seek advice about estate planning because we wanted to understand how to efficiently protect our assets and pass them safely to our children and grandchildren. We also wanted to put as much help in place for our family as possible, so as to make things as easy as possible for them when the time comes. We liked Gina’s patient and diligent manner in answering our questions and guiding us to the right solutions. Gina explained everything to us with great clarity, making concepts we were unfamiliar with accessible and clear. We particularly liked the fact that Gina came to see us in our own home without our having to make a special request; this is just the way she works. It was so much easier for us to relax and talk freely in the comfort and privacy of our home. Having put the right estate plan in place we feel that we have ticked a big box. This was something we knew we had to get round to. Now it is done and sorted and we don't have to worry about it anymore. We have also gained a clear understanding of the measures that have been put in place and why they are important. "

Matt & Betty R

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