Best Strategies for Leaving Your Loved Ones a Legacy

30 May 2017
Retreat by the sea,
There are numerous ways to provide financial security for your loved ones after you pass on. When it comes to inheritance planning these include; real estate assets such as your family home, an investment property or vacation home, as well as the proceeds of your life insurance policy, the balance left in your savings account, stocks, bonds and material possessions.

Each of these come with pros and cons and can yield profitable results depending on how you’ve managed your financial portfolio. Let’s take a look at how they affect your inheritance planning and children’s future financial security:

Life Insurance

If you take out a life insurance policy, it’s advisable to set it up so that the proceeds go into a trust for your family members. This decreases the amount of money travelling into your estate and therefore reduces tax liabilities. An insurance payout also provides your heirs with ready cash if they need to settle other debts. While life insurance dividends are a welcome inheritance, they’re a once off quick fix that won’t grow your family’s nest egg unless reinvested.

Stocks and Bonds

Stocks and bonds are powerful investments that can grow exponentially over time and provide a solid financial foundation for your loved ones to fall back on when you’re gone. However, you need expert advice from a broker or the individual know-how to ensure your money isn’t affected by volatile markets.

The drawback of relying on this type of investment for successful inheritance planning is the effects volatile markets can have on liquidating assets. If your family needs steady cash then it’s best you don’t tie up your entire legacy in stocks and bonds. Essentially, you need to find the right balance between stocks and bonds together with other assets in your financial portfolio to create to a legacy with short and long-term cash flow.

 



Real Estate

For most, a home or property portfolio is the cornerstone of their net worth or their most valued asset. Whether the property you leave your children is the house they grew up in or a holiday home, it can provide a steady source of cash flow through rentals. An inherited property is also a bricks and mortar reminder of the life you shared with your loved ones and has sentimental value that is incomparable to its material wealth.

Unfortunately, with a property, there are costs involved that you can’t avoid. The amount of inheritance tax charged for your home in the UK is influenced by how you handle your inheritance planning. If you bequeath your property to your heirs but still stay in your home for seven years or longer after gifting it to them, then the value of your property doesn’t count towards inheritance tax.


However, if you live in your home rent-free free after passing on ownership, your estate will be liable for inheritance tax even if more than seven years have passed since you bestowed your property as a gift.

More often than not, the benefits of leaving property far outweigh the associated tax costs. While the days of turning a quick profit are gone, a property can provide a significant amount of value if your heirs are in it for the long haul. In the interim, they can always earn money from renting it to trustworthy tenants.


Those with the strongest legacies have a variety of assets in their financial portfolios, usually with a strong focus on real estate. Before completing your inheritance planning, you need to know how to protect your business assets and decide if you’ll opt for a will or trust. If you’re thinking of buying an investment property, then make sure to see our Calpe property sale where tourism thrives, and rental yields are high.

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