Morton Fraser: Spring clean your finances

By Carryl Beveridge, Morton Fraser

With the days getting longer and spring just round the corner, now is the perfect time to look ahead and plan your finances for the rest of the year.

In January, we often see people who are determined to put a Will in place, but as with other New Year's resolutions, these plans can easily fall by the wayside. Will making is something people often put off doing as nobody likes to consider their own mortality and what would happen if they were no longer here. However, there is no doubt that making a Will is one of the most important things you will ever do. A recent survey carried out by the Law Society of Scotland suggested that over half of the adult population in Scotland does not have a Will in place at the moment. There will be others whose Wills were prepared a long time ago and are not necessarily up to date.

Whilst almost everyone knows that they should have a Will, how much thought have you given to Powers of Attorney, tax and pensions?

As the warmer weather approaches and we start thinking about spring cleaning our houses, perhaps it's also a good time to give our financial and personal affairs the same treatment. We are also nearing the end of the tax year on April 5, 2015 so it's also worth taking a moment to consider whether there are opportunities for some last-minute tax planning.

Wills
As I mentioned previously, making a Will is one of the most important things you can do to put your affairs in order and protect your loved ones in the event of something happening to you. If you have young children, this should include appointing guardians who would be responsible for bringing up your children and looking after their welfare. What could be more important than that?

Contrary to popular belief, if you don't have a Will, your nearest and dearest may not inherit everything you own and, even if they are first in line to inherit by law, the process will be more expensive and complicated for them without a Will. When preparing your Will, there are various issues to consider which a solicitor specialising in this field will discuss with you. It's important to consider Inheritance Tax, whether any planning could be written into your Will to minimise your estate's tax liability and whether you should adopt a tax-planning strategy during your lifetime, for starters. It's also important to be aware of the Scottish forced heirship rules which apply to spouses/civil partners and children even where there is a Will in place.

Powers of Attorney
Another essential thing to consider is a Power of Attorney. This appoints someone to manage your affairs for you if you are no longer able to do that yourself due to an accident or illness which leaves you incapable. Putting a Power of Attorney in place at an early stage saves a lot of hassle and expense for your family in the long run.

Tax planning
As we get closer to the end of another tax year, it's good practice to review your finances generally. Have you made full use of ISA allowances for the year? What about capital gains tax ("CGT") allowances? If you plan to transfer or sell assets which might trigger a CGT charge, it's well worth considering the timings carefully to see if this is best done before the end of the tax year.

If you are a non-resident owning UK residential property, you should also consider whether you need to look at tax planning, given that you will become subject to the CGT regime when you sell or transfer UK residential property after April 6, 2015. Although valuations will, in most cases, be rebased to April 5, 2015, there may be some planning to be considered before the end of the tax year to reduce your potential tax liability in the future.

Pensions
It's sensible to review your current pension provision or indeed to consider making some provision if you don't have a pension plan at the moment. Are you making sufficient contributions or should these be topped up bearing in mind the tax incentives for doing so, particularly for higher rate tax payers?

Pension reforms are about to come into effect which will make pensions a much more flexible and tax efficient way of saving and planning than ever before. This is likely to have a positive impact on succession planning going forward.

So, with spring on the horizon, can you confidently say that you have all of these things in hand, or is it time to put your house in order?

For more information about tax and succession planning, contact Carryl Beveridge at Morton Fraser on 0131 247 3180 or email This email address is being protected from spambots. You need JavaScript enabled to view it.