4 key advantages of involving your family in your financial plan

When you begin a relationship with a Financial Planner, you might expect us to stick rigidly to an individualistic point of view: your life, your goals, and your money.

While these three factors do sit at the centre of your financial plan, wealth planning is about more than just your own journey – it’s about those you love, too. Ultimately, you’re likely to be seeking financial advice in order to help your family members progress down their own paths, as well as for your benefit.

In fact, in a survey of Financial Planners published by IFA Magazine, 55% said that their clients were more worried about their families’ financial situations than their own.

Moreover, if you’re looking to help your family members thrive, it only makes sense to involve them in your financial plan from the outset.

Here are four key advantages of family financial planning, and how we can help you make the most of them.

1. Helping you to define your priorities

Financial planning helps you map out your future in a way that puts the important things first. It’s likely that your family’s wellbeing sits high on your list of priorities, so including them in your financial plan could help to measure what’s most important to you and put these thoughts into action.

For instance, meeting with a Financial Planner alongside your spouse and adult children could:

• Give you the chance to listen to their goals and concerns for the future, and to voice your own
• Establish a rough timeline for important life events, such as marriages, to help identify where you may wish to offer financial support to others
• Help you create a financial plan that takes everyone’s priorities into account, while simultaneously ensuring your own goals are considered too.

Gaining these insights can then help you approach the next three factors as a team.

2. Taking a joined-up approach to inheritance matters

Inheritance, while a positive concept overall, is often a subject that feels uncomfortable to discuss, especially with your beneficiaries.

With all the emotional intensity that surrounds death, it may be that you’ve been putting off talking about what you plan to leave, and to who. In fact, MoneyAge reveals that 57% of parents have never discussed their will with their adult children.

While understandable, leaving this conversation until it’s too late could make things harder for your whole family, both financially and emotionally. The Personal Finance Society (PFS) reveals that 3 in 4 people are likely to experience a will, inheritance, or probate dispute in their lifetime.

Luckily, you can help to avoid a future inheritance conflict by opening the conversation up as early as you can. A Financial Planner can act as a mediator of these conversations, if necessary, while offering up-to-date guidance on Inheritance Tax (IHT) and other financial matters.

Taking this joined-up approach to inheritance could reduce any anxiety you feel around leaving assets in your will, and may give your beneficiaries a clearer picture of what to expect, too.

3. Reducing your and your family’s tax burden where possible

Not only can including your family in your financial plan bring you closer on an emotional level, but doing so could also have a hugely positive impact on your financial efficiency – especially when it comes to tax.

This is especially pertinent in the 2023/24 tax year and beyond, as the Government has frozen or reduced a number of important tax-free allowances. These include:

• The IHT nil-rate bands. As we discuss in our in-depth article, the IHT nil-rate bands, which mark how much you can pass to your beneficiaries without paying the tax, are now frozen until April 2028.
• The Capital Gains Tax (CGT) annual exempt amount. You may pay CGT when you liquidate shares or sell a second home, to name two common examples. In the 2022/23 tax year, the annual exempt amount stood at £12,300, but this was reduced to £6,000 in 2023/24, and will decrease again to £3,000 in 2024/25.
• The Income Tax additional-rate threshold. In April 2023, Chancellor Jeremy Hunt reduced the Income Tax additional-rate threshold from £150,000 to £125,140, increasing taxes for those on high incomes. He also announced that Income Tax and National Insurance thresholds would be maintained at their current levels until April 2028.

As tax-efficient allowances continue to be squeezed, discussing your finances as a family could be constructive.

By heeding the bespoke advice of a Financial Planner, you and your spouse or partner could make the most of your combined individual allowances, while planning to tax-efficiently transfer assets to the next generation if you wish.

4. Forming a whole-family relationship with a trusted professional

If you already have a longstanding relationship with a Financial Planner, bringing your family into the fold could have many benefits – especially if the worst were to happen. In the event of your illness or death, a Financial Planner can help your family manage your affairs in a time of grief, acting as a trusted confidant every step of the way.

And, even without these unforeseen circumstances occurring, forming a relationship with a professional could help your family to:

• Regularly touch base with an expert, helping to improve financial behaviours, knowledge, and goal-setting throughout their lives
• Feel more confident about managing their money through the ups and downs of life
• Plan ahead for retirement and other important milestones
• Put together a package of protection that may help maintain financial stability in future
• Approach wealth planning as a team, avoiding conflict and strengthening morale over the years.

Although your money is yours alone to spend, save, invest, or give away to others, opening your plans up to your family may enable those you love most to thrive.

To learn more about how we help families go from strength to strength, email us at enquiries@pen-life.co.uk, or call 01904 661140.

Please note

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

All contents are based on our understanding of HMRC legislation, which is subject to change.

The value of your investment 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.

Note that term 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.

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

All information is correct at the time of writing and is subject to change in the future.