Christmas Gifting and Estate Planning


We’re on the countdown to Christmas and I’ve been pondering my own Christmas shopping. I couldn’t help thinking about how to prepare our clients for their own Christmas gifting and estate planning.

I know what you’re thinking! Estate Planning? Isn’t that a bit morbid for this time of the year. The truth is that it goes hand-in-hand with gifting. It’s just that most people don’t realise it until they start talking to a financial planner. That’s not meant to put you off. Quite the contrary actually. Christmas is the time of year for ‘giving,’ so it naturally falls as the time of year where ‘gifting and estate planning’ really do need to be thought about (I am so fun).

So, what do you need to know about gifting and estate planning?
1. Plan Ahead

Even at Christmas, we find ourselves repeating the same financial planning mantra we say all year round. Start early! Prior planning is crucial, and especially where gifting and estate planning are concerned. None of us know what is around the corner. Yet it’s so easy to delay key planning tasks like updating a will, or naming a Power of Attorney. After all, they’re uncomfortable things to have to think about. However, it’ll be more uncomfortable for your loved ones if these provisions aren’t in place should the worst happen. So, while ‘Christmas gifting’ is on your mind, be sure to get your estate planning sorted at the same time.

2. Decide what, and when, to give

When thinking about how much to give, it’s worth taking the annual exemption allowance into consideration. This allows you to give away £3000 worth of gifts each tax year, without the figure being included in your estate for tax purposes. You can also carry forward any unused annual exemption from the previous tax year.

It’s also worth considering the smaller gift allowance. This allows you to gift up to £250 to as many people as you wish (but not in conjunction with the £3000 annual exemption allowance).

Gifting is an important financial planning strategy because it allows assets to be removed from your estate for the purpose of Inheritance Tax calculations. So, you’ll want to carefully consider the impact of exemptions and allowances to ensure that as much of your estate stays with your loved ones.

Financial Advisers deal with estate planning all of the time. So, they will be deft hands at weighing up whether you can benefit from the various allowances.

 3. Decide how to give it

Just as we deliberate over wrapping our Christmas presents, considering the way your ‘Christmas gifting’ is presented to the beneficiary is important. Every client is different. So, it’s important that your specific goals and circumstances are taken into account when ‘gifting.’

Often, gifts into discretionary trusts are popular because of their flexible nature. These can allow the trustees to manage and retain control of how the assets are distributed to beneficiaries, while also providing a highly tax-efficient manner to pass funds on to your loved ones.

Ultimately, having a clear strategy around your gifting and estate planning is key. And, sorting it at the earliest opportunity possible will allow you the peace of mind to know that, come what may, your loved ones are protected this festive season.

Now… time to get on with that Christmas shopping.

As always, if you’d like to talk to one of our financial planners, please do give us a call on 01243 767 469. Alternatively, you can email us via our contact page and an adviser will be in touch!