FINANCE News from PCC

Expert financial advice

By Andy Oliver, CEO of Private Client Consultancy

UK Inheritance Tax and Estate Planning: What You Need to Know

In a recent report by the Organisation for Economic Cooperation and Development, a call was made to increase UK inheritance tax (IHT). The government is looking for ways to pay off debts that were catalysed by the pandemic, and policymakers are targeting IHT as a way of doing this. Some believe that increasing the tax on inheritance is a fair way of funding government programmes. Others argue that it should not be so high because it is money that has been previously taxed. Whatever your beliefs are, it is imperative that you be prepared for these changes. It is advisable to develop an effective strategy well in advance. Private Client Consultancy can help you feel confident about your plan. Because property prices are continuing to rise, more people are being pushed over the IHT threshold of £325,000. When a property is involved, the threshold rises to £500,000. Evidently, UK IHT is complex, and it is made even more difficult for expatriates. While Portugal does not have IHT, British nationals will still typically be subject to the UK’s inheritance laws. This is even if they are a resident of Portugal and none of their assets are in the UK. The following is vital information regarding IHT that you may want to consider when planning your estate.

Make a will

Making a will is one of the first steps in planning your estate. Quite frankly, it is also the most important. Of course, no one wants to think about this. There are many emotions that arise when one begins this kind of planning, but the benefits are endless. Often when there is no plan in place, loved ones are left with hefty IHT bills at a time when they should be allowed to process their grief. Where the estate value is high, IHT must always be paid. However, if a will is made in advance (and regularly updated), the amount of tax will be greatly reduced. To ensure that your possessions, property, and money are allocated properly, it is essential to seek out professional help when drawing up a will. This is especially true when there is a business and/or overseas property involved. Business relief will allow for some assets to be passed on either tax-free or with a reduction on the bill. Additionally, expats pay a reduced tax rate if more than 10% of their net worth is left to charity. If your main residence is in the UK, then you are liable for the IHT on foreign assets. However, if you live permanently abroad, then there may be exemptions depending on where you are domiciled (though these exemptions are very rare as it is incredibly difficult to lose your domicile). This is a complicated area of the law and can be discussed in further detail with one of our advisers. What you want to avoid is being taxed twice. If you don’t manage your estate carefully by having an expert help you understand the laws of the countries you hold residencies in, then you may risk being taxed twice.

Establish a trust

There are many benefits to creating a trust. For one, they protect your wealth by helping provide managed funds to your beneficiaries. They also allow for shares and equity to be passed on in an efficient manner. Assets that have been placed in a trust are not exempt from the law. This is a common misconception that has landed many people in troubled waters. However, they do reduce IHT if created properly. Because the laws around trusts are intricate, you may end up paying more IHT than necessary. Therefore, speaking with a professional is necessary because they can help you avoid this.

Set up a life insurance policy

It is possible to use a life insurance policy to help beneficiaries cover any IHT liability. If your beneficiaries are paid a regular income or lump sum from your life insurance and the money takes your estate above the IHT threshold, then whatever is above the threshold is liable to 40% tax. However, if your life insurance is paid to your spouse or a charity, then IHT is usually not charged. This is true even when the amount surpasses the IHT threshold. Whether or not IHT will need to be paid depends on your estate’s value. However, if you write your life insurance policy into a trust, the lump sum that is paid out in the event of your death is not included in your legal estate. Therefore, by giving up ownership of your assets, all management responsibilities go to the trustees and the estate will no longer be subject to IHT.

Know your rights

Finally, it is crucial that you know your options—all of them. There are so many aspects of the bureaucratic processes imparted upon us that are purposely made to be painstaking. Knowledge of what choices you have provides you with financial freedom, and that is invaluable. Later in life, whether it is due to empty nesting, for the stamp duty holiday, or because of ageing, many people decide to sell their expensive properties or go into care homes. Often, they don’t realise that this allows them to qualify for a little-known tax credit called the ‘downsizing addition’. The amount one receives for the downsizing addition is typically the same as the residence nil rate band that is lost when the prior home is no longer included in the estate. Many have no idea that the downsizing addition even exists, and this is partly to do with the fact that the rules around it are very complicated. If this family home allowance is not claimed by the descendants after a death, the family will incur a large death tax bill. Claiming the downsizing addition often allows for the tax bill to be cut entirely. Therefore, missing out on this tax credit can cost families as much as six-figure sums. Additionally, you may want to consider an equity release scheme. Lifetime mortgages and home reversion schemes allow you to keep living in your family home all while releasing money and reducing IHT. Once the equity has been released from your house, it can be gifted to your descendants. There will be no IHT to be paid on it if this is done at least seven years prior to your death. Before making any significant decisions about what will happen to your estate when you are gone, speak to one of our Wealth Managers to ensure your plan is perfectly tailored to your needs. As I mentioned before, the legalities around IHT and estate planning are often so convoluted that people leave it until the last minute. Of course, doing this will allow for various problems to arise that could have been avoided. Consulting with an adviser about your estate will provide relief and ultimately save you so much time and energy. You have already done the hard work. We are here to simply help you make the most of what your hard work has afforded you and your family. If you would like to discuss your plan with a qualified adviser, please get in touch with us at info@pccwealth.com

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The Morais Bonifácio Group are at hand to help with your health issues and requirements, including:

◦Advanced adult physiotherapy ◦Physiotherapy for seniors ◦Paediatric physiotherapy ◦Clinical pilates ◦Pre-natal clinical services ◦Postpartum clinical services ◦Baby therapies ◦Nursing ◦Paediatric osteopathy ◦General and speciality medicine

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Sara de Melo Castanheira is an expert in Occupational Therapy and Quality of Life. She is also the Technical Director of SER Igual, an Association of special rehabilitation services in Tavira

Caring for the families

The term “special needs” is used broadly to refer to children with learning difficulties and/ or physical disabilities. We can also refer to children with longterm special needs, for example when there is a restriction or a lack of ability to perform normal activities, which resulted from the impairment of a structure or function of the body or brain. These children are likely to need long-term support and assistance in education and sometimes in health too. SER Igual has worked with families of children with special needs since 2017. We notice that it is not just the child that needs support and assistance, their parents need it too. Most of these parents feel alone and feel that their voice is not listened to or others don’t care about them. This is an article to give voice to these brave parents. Working with families of children with special needs has always to be a relation of cooperation between the family and the therapist. Many families need to establish a cooperative relationship with more than one therapist because their child/teenager needs more than one therapeutic specialty. With the cooperation we establish a partnership where we work together with the same purpose and goal. When the children wins both, family and therapist, win too. For many years parents of children with special needs were left largely unsupported and received little help from therapists. The focus was predominantly on the child and the dominant training model and practice of the therapists as experts tended to work against establishing cooperative relationships with parents. This was (and in some places still is) the traditional way of working with these children. In SER Igual we use the transplant relationship and the negotiating model. This relationship perceives parents as an untapped resource for helping in the therapy of the child and the home as a potentially important learning setting. Therapists share or transplant their skills and expertise to parents to help them become more competent, confident and skilled. Parents are assisted to become actively involved and to participate in the role of co-therapists. Parents are seen as a resource with particular competences which can be utilised and are expected to be an involved participant. The professional takes on the functions of instructor and consultant to the parent, as well as being the expert, to guide the parent’s activity with the child. A two-way communication happens, where the therapist transmits skills to the parent and the parent gives feedback on the intervention. The professional and the parents design the therapeutic programme and both views, feelings, worries and fears are listened to and taken into account. The negotiation model focuses on negotiation as a key transaction for partnership work. The definition of partnership here is a working relationship where the partners use negotiation and joint decision-making and resolve differences of opinion and disagreement, in order to reach some kind of shared perspective or jointly agree decisions on issues of mutual concern. Its premise is that the parent and the therapist have separate and potentially highly valuable contributions to offer to children with special needs and other family members, so each may require the contribution of the other. And once more we see here the importance of learning about the parent’s perspective through considerable listening, inquiry and openness. As we consistently working with this framework, we take part on the many fears that parents feel about their children future, and we just feel that this is the right way of working with the children and with the parents as well and with the family as a whole. These are examples of parent’s comments of teenagers with long-term needs: “- Who is going to take care of him after my death? – Who will understand him if he doesn’t speak? – Where will I find a place like my home so he doesn’t feel homesick when I am not capable of treating him anymore? – How will I know if he is ok, if I can’t see him every day when I will no longer live with him? – He doesn’t speak on the phone, how will I contact him without feeling guilty for leaving him in the care center?”. These are other examples of parents’ comments of toddlers and children with special needs: “ - How will he learn and be autonomous? - Will he, one day, be able to dress by himself? - Will he be able to eat his food? - Will I, one day, be able to leave him at school without feeling anxious for his safety and comfort? - At school how will they understand what he needs and feels if he doesn’t speak? - I don’t know if he is happy at school, because I don’t see him with any friends! - I will invite his colleagues to his birthday party but I don’t know if they will come! And what will I do if they don’t?” Most of these parents put all their effort and money on their children’s therapeutic programmes. Most of these kids do two or more therapies per week and there are kids that due to serious difficulties also have intensive rehabilitation programmes like Pediasuit Program or Neurofunctional Therapy Program - Padovan. Most of the parent’s don’t take care of their mental health as they should. Many because they don’t have enough money, others because they feel like it is the child that needs most. But having a good and stable mental health can and really does help them to live better, to take care of their children with less stress, and help them to live with low fear of the future, with low levels of anxiety and with a more positive perspective of life. In SER Igual we aim to put in practice a programme to take care of the mental health of parents of children/teenagers with special needs. A programme that will have someone to listen to them, making them speak to each other as a group to share life experiences and to support each other’s, having meditation classes and much more. For that to happen we need extra financial support, because if not, the programme will not be for free and with our experience we know that they will not join the programme. We already tried it! Dear reader, we need you to help us to help these parents in need. Please contact Associação SER Igual and together we will see in what ways we can collaborate. Please visit us on our FB page @SerIgualPT or make an appointment to geral@seronline.pt or by phone 918180020. Stay safe and stay tuned for next article.

INSPIRATION FOR THE BODY AND SOUL

The wonderful world of Bamboo

Bamboo is one of the most multifaceted plants on our planet symbolising strength, fertility, youth, prosperity and peace. Bamboos include some of the fastestgrowing plants in the world. Certain species of bamboo can grow 910 mm (36 in) within a 24-hour period, at a rate of almost 40mm (1+1⁄2 in) an hour (a growth around 1mm every 90 seconds. Bamboo shoots or bamboo sprouts are the edible shoots of many bamboo species. They are used as vegetables in numerous dishes and broths. They are sold in various shapes, and are in fresh, dried, and canned versions.

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