Archive for the ‘Legacy’ Category

Making a difference with e-Cards

December 17, 2012

 

Since December 2010, instead of sending our clients traditional Christmas cards, we send electronic greetings cards and add the money saved to our Kiva account.

I first heard about Kiva at a philanthropy talk given by the Charities Aid Foundation who described Kiva as a new kind of Charitable Giving* or a new way for Philanthropists to use their money. Kiva enables individuals and companies to lend to people and small businesses in the Third World. This microfinance is used to help low-income individuals lift themselves out of poverty improving the lives of their family and boosting the community in which they live.

The Kiva model is very simple.

  1. You select an applicant to lend to on the Kiva website. These loans are made possible by Kiva Partners who vet, administer and disburse each loan.
  2. You receive updates on your loan and the person you have helped through emails and the Kiva website.
  3. As the loan is repaid, the money becomes available in your Kiva account.
  4. Once you have sufficient in your account, you can use it to fund another loan, donate it to Kiva, or withdraw it to spend on something else.

To date Bluecoat Wealth Management has made 38 loans to people in Agriculture, Clothing, Food, Manufacturing, Retail, Services and Transportation sectors in Africa, Asia, The Middle East and South America. This Christmas, instead of burdening your local postman we have lent to and helped;

  • A cooperative of nine women in Indonesia who breed pigs
  • A carpenter who is starting a butchers in Mongolia
  • A farmer in Kenya who wants to buy a cow and three acres of land for a tea plantation
  • A furniture maker in Mongolia to buy a delivery van
  • A group of farmers in Uganda producing beans, maize and millet.
  • A cooperative in Tanzania that produces and sells shoes
  • A lady in Ecuador buying stock for her grocery store

If you would like to help us alleviate poverty by making loans as small as $25, join our lending team so that we can work together to expand opportunity for borrowers worldwide. Click here http://bit.ly/VLmSOc

Wishing you all a very Merry Christmas and successful 2013.

 

*Kiva is a Not-For-Profit Organisation rather than a UK registered Charity. Lending to the working poor through Kiva involves risk of principal loss. Kiva does not guarantee repayment nor do they offer a financial return on your loan.

 

Posted in Active in the community, Legacy, Money Matters

Five Practical Steps to Save Inheritance Tax

February 17, 2012

Step One – the basics

 Making a Will is vital – particularly if you are not married. If you die “intestate” (without a Will) your estate will be divided up according to the rules of intestacy. This is particularly important if you are not married because a “common law” spouse is unlikely to inherit partner’s money, or even their share of the home.

 For example, in England & Wales, your legal spouse only receives chattels and £250,000 plus a life interest in half the remainder of your estate; your children receive the balance at age 18. If you have no children, your spouse receives chattels plus £450,000 plus a life interest in half the remainder; your parents or siblings receive the balance. If you have no spouse and no children, your estate passes to your parents or then your siblings. If you have no legally recognised family, your estate goes straight to the Crown.

 Step Two – use your allowances

 You may gift up to £3,000 annually without being liable for Inheritance Tax, and unused allowances can be carried forward for one year. You may also make an exempt gift when someone gets married, this is £5,000 for parents of the bride or groom, £2,500 for grandparents and £1,000 for anyone else.

Regular gifts out of income are exempt from inheritance tax provided they do not adversely affect the donor’s standard of living. This provides a myriad of planning opportunities.

 Gifts to charities are exempt from Inheritance Tax.

 Step Three – using trusts

 Trusts have long been perceived as an easy way of brushing off an Inheritance Tax liability. If this was ever the case, it changed after the 2006 Budget, which closed down many planning opportunities. Under the new rules, Interest in Possession (IPP) and Accumulation & Maintenance (A&M) Trusts became subject to the same rules as Discretionary Trusts.

 Transfers into IPP and A&M trusts over the donor’s nil rate band (currently £325,000) are subject to an upfront 20% inheritance tax charge, and liable to a periodic charge of up to 6% every 10 years. Despite this, these trusts are still very useful planning tools as they allow the nil rate band to be gifted every seven years without giving rise to inheritance tax.

 Review your existing life assurance and pension policies; check that they are written under appropriate trusts to ensure that death benefits are not paid into your estate where they will become subject to inheritance tax.

 Step Four – consider life assurance

 Life assurance can be a useful way to facilitate enough money to pay your inheritance tax bill when it arises.  The policy is funded from “regular giving pattern” premiums which are usually exempt from inheritance tax, but it is essential that the policy is written in trust so that the proceeds fall outside your estate.

 Step Five – consider tax favoured investments

 Certain investments in businesses and smaller company shares are tax favoured when it comes to inheritance tax, provided that they have been held for two consecutive years in the past five years.

Some, such as Enterprise Investment Schemes, also attract income tax relief and favourable capital gains tax treatment. These investments however, will not be suitable for everyone, as they carry considerable risk to the capital invested – hence the favourable tax treatment. It is essential to seek Independent Financial Advice before embarking on these types of investment so that the risks can be tailored to the requirements of individual investors.

 Summary

 There are numerous opportunities for individuals trying to mitigate the effects of inheritance tax. Advice, timing and planning are essential in this area, where the old adage, “if you fail to plan, you plan to fail” holds true. Unfortunately the cost of failing to plan usually has four or more zeroes on the end.

 Contact Robin Clarke to review your inheritance tax position; robin@bluecoatwm.com or 01273 466533

 

 

Posted in Inheritance Tax, Legacy, Money Matters

Tax Matters

January 27, 2012

How much will your beneficiaries keep?

How much of your hard-earned money will the taxman get his hands on?

Inheritance Tax (IHT) in the UK may be one of life’s unpleasant facts but IHT planning and quality advice could help you pay less tax on your estate.

For the 2011/12 tax year, no IHT is charged on the value of your estate up to £325,000. This is known as the ‘nil rate band’. Everything above this is taxed at 40 per cent. This allowance is unchanged since April 2010 and has been frozen at this level until the end of this parliament. In real terms the allowance is decreasing.

If an individual’s IHT nil rate band is not used up on their death, the unused proportion can be transferred to their surviving spouse or civil partner. Please note that the additional nil rate band has to be claimed by the Executor’s  of the widow(er)’s Estate and that HMRC will require the following documentation (often 20 or more years after death);

  •  a copy of the first will, if there was one
  •  a copy of the grant of probate (or confirmation in Scotland), or the death certificate if no grant was taken out
  •  a copy of any ‘deed of variation’ if one was used to vary (or change) the will

Assets passed between spouses or registered civil partners are exempt from IHT (assuming the spouse or partner is domiciled in the UK), regardless of the worth of the assets and how soon you die after acquiring them.

Reducing your family’s tax bill

Any amount of money you give away outright will not be counted for IHT if you survive for seven years after making the gift. If you die within this period, the amount of the gift will be included within your estate. Taper relief may apply in these circumstances and can reduce the amount of IHT due. If you start gifting early enough each individual can reduce their Estate by £1.3 million over a 28 year period (four times IHT exemption at current levels by gifting every seven years). The type of Trust that you use should be carefully considered – many allow you to retain an interest in an income, some make this “income” available in a similar way to keeping hold of your capital, others allow loans to widow(er)s. Independent Financial Advice is essential as the cost of various Trusts differs enormously.

Certain assets are currently exempt from IHT. Business assets such as privately owned businesses, furnished holiday lettings, some commercial property and certain qualifying investments such as Enterprise Investment Schemes (EIS) and AIM listed shares are exempt, provided they have been held for two years continuously, during the previous five years. Investors should note that the IHT tax concession is given on these investments because they tend to be more risky than mainstream investments. EIS investments also benefit from income tax and capital gains tax concessions as these are perhaps the most risky.

Gifting your nil rate band into a Will Trust still has advantages despite the ability to transfer any unused nil rate band to the surviving spouse. It ensures that the assets cannot be used to pay for Nursing Fees, or squandered by a subsequent spouse, while allowing the survivor to enjoy income or the benefit of residing in the matrimonial home. Many Will Trusts allow the survivor access to capital by way of loans that accrue interest and count as a debt against their Estate, further reducing the final IHT liability. Good advice is essential in this area and Trustees should be chosen with care as they will control the Trust’s assets.

Conclusion

Inheritance Tax is often described as a voluntary tax as, with careful planning, steps can be taken to avoid it altogether or, at worst, mitigate the effects of it. The old adage, “if you fail to plan, you plan to fail”, is perhaps most pertinent in this area of Financial Planning as the cost of failing to take action can be enormous.

Posted in Financial Planning, Inheritance Tax, Legacy, Money Matters

Trust in your future

December 15, 2011

 

Trust in your future

Passing on wealth in a tax-efficient manner

Inheritance Tax (IHT) is an issue affecting increasing numbers of households across the country. Changes introduced in Chancellor Alistair Darling’s pre-Budget report in October 2007 have made it possible for couples and civil partners to combine their individual IHT allowances, so that it is easier for them to protect their families’ inheritance.

IHT is currently payable at 40 per cent on any amount over £325,000 – the nil rate band (tax year 2011/12). The nil rate band is the term used to describe the value an estate can have before it is taxed (£650,000 for married couples). So if you have an estate worth £500,000, £175,000 is taxed at 40 per cent, meaning the IHT bill would be £70,000.

Estate planning tool

Trusts are a well-established and useful tool in estate planning. A trust allows someone (the settlor) to make a gift of assets, without completely losing control of those assets, by placing them with a third-party (the trustees) to administer on behalf of the trust beneficiaries.

The value of a trust in IHT planning is that it enables you to reduce the wealth on which your beneficiaries will pay IHT without making a valuable outright gift – something you might be reluctant to do if the potential recipients are quite young or might take an irresponsible approach to a substantial sum of money, for example.

Passing on wealth

Other trusts, known as discretionary trusts, allow the trustees to retain control of the assets under the terms of the trust, which set out when and what the beneficiaries receive. They can also allow the trustees to react to changes in the beneficiaries’ circumstances. Again, the settlor can be named as a trustee.

Bare (Absolute) trusts

With a bare trust you name the beneficiaries at the outset and these can’t be changed. The assets, both income and capital, are immediately owned and can be taken by the beneficiary at age 18 (16 in Scotland).

Interest in possession trusts

An interest in possession trust is one where the beneficiary of a trust has an immediate and automatic right to the income from the trust after expenses. The trustee (the person running the trust) must pass all of the income received, less any trustees’ expenses, to the beneficiary.The beneficiary who receives income (the ‘income beneficiary’) often doesn’t have any rights over the capital held in such a trust. The capital will normally pass to a different beneficiary or beneficiaries in the future. Depending on the terms of the trust, the trustees might have the power to pay capital to a beneficiary even though that beneficiary only has a right to receive income.

Discretionary trusts

Here the trustees decide what happens to the income and capital throughout the lifetime of the trust and how it is paid out. There is usually a wide range of beneficiaries but no specific beneficiary has the right to income from the trust.

 

This article is for your general information and use only and is not intended to address your particular requirements. It should not be relied upon in its entirety. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation.

 

Posted in Financial Life Planning, Financial Planning, Inheritance Tax, Legacy, Money Matters

Locating lost assets

December 8, 2011

Many organisations can help you track down your forgotten wealth

At any one time it is estimated that between £15 – £20 billion is lost in the financial system. Some of it belongs to people who have died but the majority has just been forgotten. For those who think they’ve lost track of an account or funds there are many organisations that can help you track down and find these assets.

Bank and Building Society accounts

If your account has been inactive for a long time your account provider should write to you to ask if you want it to remain open. If it gets no response – perhaps because the letters are going to an old address – it will stop sending letters and statements and class the account as dormant. However, your money will be safe and waiting for you to reclaim it.

If you have a passbook or details of the account and where it is held you should contact the provider directly. Some banks have forms on their websites for you to fill in and reclaim your money. The more account details you have the better your chance of being quickly reunited with your money.

Savers who don’t know which bank or building society their account is held with, or who currently owns the organisation, can use a central search set up by the British Bankers’ Association (BBA), the Building Societies Association, and National Savings and Investments (NS&I). You should call the BBA’s dormant accounts unit on 020 7216 8909.

National Savings & Investments

You can go direct to NS&I and use its tracing service, or use the mylostaccount site to search for lost accounts. Both services cover accounts bought from NS&I and the old Post Office Savings Bank accounts, as well as missing Premium Bonds.

However, if you know your Premium Bond numbers but do not know if you have unclaimed prizes you should check if you have won on the NS&I website.

As long as you have some information or documentation – for example, the holder’s number, the holder’s card or the Bond itself – you won’t need to complete a tracing request form to claim your lost prize.

Pensions

The government’s Pension Service will track down your missing occupational or personal pension schemes. You can just give the name of your previous employer or pension scheme provider, but the more information you can provide the more likely you are to be successful. A full name and address for the scheme or employer, and details of when you were a member, will help.

Investments and Insurance policies

Unless you know the name of the company from which it was bought, the easiest way to trace a lost life insurance policy is to pay a search service. The Association of British Insurers suggests using the Unclaimed Assets Register, as many of its members register unclaimed policies with the site.

You can search online for policies held in your own name, but if you want to search for policies held in someone else’s name – for example a deceased parent – you will need to print off the form and post it. Its database includes unclaimed life policies, pensions, unit trust holdings and share dividends.

This article is for your general information and use only and is not intended to address your particular requirements. It should not be relied upon in its entirety. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation.

Posted in Legacy, Money Matters

Bluecoat helps Entrepreneur in Uganda

December 22, 2010

Bluecoat Wealth Management has lent money to Namuganza Joy  through KIVA to invest in her welding business.

Namuganza is affliated to Alinhinkira Group-Jinja and is happily married with nine children.

The trade of welding has mostly been a male preserve, but it is fascinating that in today’s Uganda you will find women who are eager to turn a hand to even the hardest of jobs, which often involve a lot of elbow grease. Joy has been involved in this trade for ten years now. Her operating headquarters are in Ivunamb trading center-Jinja.

The need for self reliance, she says, is what got her started in this business. Her story of transformation from a housewife into a fully fledged businesswoman is something in which she takes pride. She says young underprivileged girls can look up to her and emulate her. Her weekly income is 70,000 UGX. Joy also runs a charcoal sales business. With this loan, she wants to purchase metal materials for welding doors, windows and chairs.

Kiva empowers individuals to lend to an entrepreneur across the globe. By combining microfinance with the internet, Kiva is creating a global community of people connected through lending.

Kiva was born of the following beliefs:

  • People are by nature generous, and will help others if given the opportunity to do so in a transparent, accountable way.
  • The poor are highly motivated and can be very successful when given an opportunity.
  • By connecting people we can create relationships beyond financial transactions, and build a global community expressing support and encouragement of one another.

Kiva promotes:

  • Dignity: Kiva encourages partnership relationships as opposed to benefactor relationships. Partnership relationships are characterized by mutual dignity and respect.
  • Accountability: Loans encourage more accountability than donations where repayment is not expected.
  • Transparency: The Kiva website is an open platform where communication can flow freely around the world.

Posted in Active in the community, Legacy

Making a difference through Kiva

November 23, 2010

Bluecoat Wealth Management has just made a loan to Armine Khachatryan in Armenia through Kiva.

Armine is married and lives with her mother-in-law. Both Armine and her husband are university graduates, but as they were unable to find a job in their fields, they have started their own business. Armine has been in the clothing trade business since 2004 and her husband helps her by taking care of the bookkeeping. Armine has applied for the loan to purchase autumn clothing stock.

Kiva is an organisation that empowers individuals to lend to an entrepreneur across the globe. By combining microfinance with the internet, Kiva is creating a global community of people connected through lending.

Kiva was born of the following beliefs:

  • People are by nature generous, and will help others if given the opportunity to do so in a transparent, accountable way.
  • The poor are highly motivated and can be very successful when given an opportunity.
  • By connecting people we can create relationships beyond financial transactions, and build a global community expressing support and encouragement of one another.

Why not join us in making a difference? Join the Bluecoat Wealth Management team on Kiva and help improve someone’s life. http://www.kiva.org/about

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Posted in Active in the community, Legacy

Your Legacy Journey

November 1, 2010

Navigating your legacy

Guiding you through your giving journey

You’ve decided to create a Legacy and give some money to good causes that make a difference in the world, but how should you set about it? How can you ensure that your money really does make a difference? Bluecoat Wealth Management can guide you on this journey.

Here are four key stages to your Legacy Journey;

1.       Develop your giving strategy. 

Which areas are of interest, medical research, education, poverty, third world, environmental, road safety? 

Having decided on which area you want to support, you then need to research which Charities will use the money most effectively so that you understand the impact of your Legacy.

Be clear about what it is that you want to achieve – set objectives.

Put in place the necessary infrastructure, perhaps a Charity or Trust account.

 Put in place a structure to evaluate the effectiveness of your giving.

Think about how to involve your family.

2.       Decide on funding and investment. 

How much do you want to commit? Will this come from income, cash, assets or investments?

Consider the tax implications.

When do you want to give the money – during your lifetime or after you pass away?  Over what period will your legacy be distributed – this will dictate whether cash or other investments are suitable.

What should the asset allocation be and how often will you rebalance it?

3.       Run your Legacy Programme. 

You may wish to do this yourself (during your lifetime), delegate it if you want to remain anonymous, or arrange for the programme to be run after your death. It’s essential to consider the individuals, or organisation involved, and to make contingency plans.

Are there any specific projects that you want to fund or become involved with? In which case make a restricted donation.

Identify who you will liaise with at the Charity and feedback mechanisms. Be clear about your expectations.

4.       Evaluate and Maximise the Impact of your Legacy Programme

 This is the part that is most often forgotten!

Use your evaluation structure and refine it. Review quantitative and qualitative data, outcomes and impact. Have there been any unexpected benefits?

Are there different, more innovative, ways to achieve your goals and maximise impact? Could you work with others to maximise this?

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Posted in Active in the community, Legacy

5 things to consider before making a charitable donation

September 7, 2010

With nearly 200,000 Charities registered in the UK almost every conceivable good cause is already covered, but their effectiveness in delivery varies enormously. Here are 5 things to consider before making your donation to charity;

1. Is there another larger or more efficient Charity already working in this area?

The Charities Commission website gives comprehensive information on all but the smallest charities, including how much of their income is spent charitably. You can research this yourself, or find a specialist adviser to do the legwork for you.

5 Things to consider before making a charitable donation

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Posted in Legacy

Leave a legacy

August 5, 2010

Did you know that 38 billionaires have pledged to give at least half of their wealth to charity?

The Giving Pledge is a campaign started by investor Warren Buffett and Microsoft founder Bill Gates. It has been established to convince US billionaires to give away at least half of their fortunes either during their lifetimes or after their deaths.

Leave a legacy

Those who pledge their money to “philanthropic causes and charitable organisations” must publicly state their intention through a letter of explanation. Recognised names already signed up to the campaign include New York Mayor Michael Bloomberg, CNN founder Ted Turner and entertainment executive Barry Diller.

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Posted in Legacy

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