2. Decide how much to give
Once you’ve assessed your estate, it’ll be easier to work out how much you can realistically afford to give away early – if anything – and who you want to benefit.
Charlotte Ransom, of wealth management firm Netwealth, said: “Before making any gift, take an honest assessment of what you have today, what income you expect in the future and, crucially, what you think you will need to fund your own retirement.”
Making gifts should never come at the expense of your own financial security.
Clare Stirzaker, of law firm Boodle Hatfield, added: “When it comes to the amount of money to give to loved ones, many people focus on how much they would like to leave their children or grandchildren, rather than how much they can realistically afford to part with.
“We often see people underestimate how long retirement may last and the potential impact of future care costs, healthcare expenses, as well as the impact of inflation. Before making any gifts, it’s important to be confident that your own financial security won’t be affected.”
Cash flow planning can be particularly useful here. This is the process of mapping your expected income against your projected living expenses year-by-year during retirement, which can help you understand how a gift today could affect your finances years later. If you’re unsure, it can be worth speaking to a financial adviser or financial planner.
