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Why succession planning is successful planning

Date: 18 October 2021

We have all been guilty of burying our head in the sand when it comes to our finances. Often, we are so busy worrying about our present financial situations and priorities that we forget to consider what might happen in the future.

Succession planning is not simply a ‘nice-to-have’. It is imperative that you have firm plans in place for leaving a legacy, as well as passing wealth on while you are still around.

Failing to plan can have tax implications, not just for you but any family members left behind by a death. It can also lead to family tensions or disagreements, particularly if financial plans have not been communicated properly.

The term ‘legacy planning’ should bring to mind inheritance tax (IHT) and tax planning more generally, writing and leaving a will, and wealth accumulation and transfer. If you have been putting off any or all of these, now is the time to act.

Family matters

Succession planning starts as soon as you have bought your first property, entered a civil partnership or married, or had your first child – whichever order those take.

Many people buy a house, first and foremost, to live in. But it is likely to be the biggest asset you own, which means that when you die, there needs to be a clear plan in place for what happens to your estate. Owning a property, or buying a second house to rent out, often forms part of retirement planning, so the tax treatment of residential property needs to be considered. Failure to do so could leave your spouse or dependents with a significant and unexpected tax liability upon your death – IHT is charged at 40% of the value of estates above £325,000, if you haven’t planned properly.

Succession planning

Deciding to start a family is a joyous time – but it should also prompt conversations around succession planning. Having children means you will need to plan to finance their upbringing and, eventually, to leave them with an inheritance of some kind. According to the Child Poverty Action Group, the cost of raising a child to the age of 18 is more than £70,000. This figure can quickly climb once you add in the cost of private or higher education, along with setting aside money for life events such as weddings and their first step onto the property ladder.

To ensure your children have the best quality of life, planning for their future as early as possible will better prepare them financially. Whether you are just starting a family, or your children have grown up and started their own, it is vital to consider how you are prepared should something unexpected happen to you.

Prioritising setting aside your wealth in tax-efficient wrappers will ensure that your family can inherit as much of that wealth as possible – and surrender less to the taxman.

For example, it is worth knowing IHT is not paid if the value of your estate is below the £325,000 threshold or if you decide to leave everything above the £325,000 threshold to your spouse, civil partner, a charity or a community amateur sports club.

Women in focus

Statistically, women live longer than men. In England, life expectancy in 2020 was 78.7 years for males and 82.7 years for females.

In relationships or marriages between a man and a woman, it is usual that women inherit their spouse’s wealth before it passes onto any dependents. Therefore, it is important that women are included in investment and inheritance planning conversations from the beginning to avoid being left with any nasty succession surprises, such as an IHT bill.  

Women are also more likely to be the one responsible for their household’s finances. A survey by The Fawcett Society found that most male and female respondents agreed that the woman in a heterosexual relationship has more control on household spending.

Additionally, it is expected that by 2025, more than 60% of UK wealth will be in the hands of women. Yet, some 70% of women do not currently engage with their finances, according to a WealthiHer Network Report.

These stark figures emphasise the importance of including all family members – but especially female spouses – in conversations and decisions regarding succession planning.

How can we help?

Speaking to an investment manager may be helpful when deciding what is a priority for you when leaving a legacy. Your Investment Manager can construct a discretionary portfolio that best aligns with your risk preferences and will work towards your main financial objectives around wealth transfer and inheritance upon death.

Additionally, they may work with a financial adviser to optimise the tax efficiency of your investments by allocating to the most appropriate investment wrappers for a range of life events. This could be investing a personal pension to provide an income upon retirement, or gifting part of your portfolio to a family member on their 21st birthday, for example.

If you want your family to be financially supported whenever you are no longer alive to provide it, Quilter Cheviot can manage your assets to avoid overpayment of inheritance tax, ensure family members are aligned on the division of assets, and continue to look after any wealth left to those under the age of 18.

An increasingly important part of succession planning is tailoring portfolios to meet specific environmental, social and governance objectives. Quilter Cheviot is committed to being a responsible investor and a steward of clients’ assets.

Thinking about your financial future is often a daunting task, but with Quilter Cheviot by your side, it doesn’t need to be. Seeking professional advice and keeping the lines of communication open with your family members and any beneficiaries of your legacy, will ensure a smooth succession journey.


This material is not tax, legal or accounting advice and should not be relied on for tax, legal or accounting purposes. Quilter Cheviot Limited does not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting adviser(s) before engaging in any transaction.


Vanessa Eve

Associate Director
Megan Rimmer

Megan Rimmer (APFS)

Chartered Financial Planner

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