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How to balance living with giving

  • Explain how to balance living with giving
  • Identify how advisers can help families mitigate potential poverty in later life
  • Describe why analysis and planning is important
CPD
Approx.30min
How to balance living with giving
 Photo via Pexels

As adults we become adept at juggling priorities and managing agendas. But when it comes to finances, people often find themselves in a fog, resulting in stasis and inaction. 

Good advisers give people insight and clarity, leading them out of the fog and shedding light on directions.

Often advisers will help people perceive options for their longer-term futures, revealing needs in later life that may not be immediately apparent and protecting against longer-term losses or financial needs.

One dilemma that comes up regularly in people’s lives is how to balance living with giving; in other words, how to ensure that someone has enough money to fund their longer-term care costs as well as for family members to inherit and, in some cases, for channeling into good causes such as philanthropy and charitable giving. 

There are various ways that advisers can help families mitigate potential poverty in later life, while ensuring that families, loved ones and society also benefit from good advice and expedient action.  

Mohammad Uz-Zaman, founder of ADL Estate Planning, says: “Most people eventually think about their retirement plans and their inheritance tax planning as they intend to leave more wealth to their children than to the taxman.

"However, rarely do people think about their long-term care needs."

He adds: "Softer facts about philanthropic values may not be as apparent during the early years of a financial relationship when a client’s goal is purely to ensure their investments are structured properly or making sure they have the most appropriate protection policies in place. 

“But people become more concerned about the world they are living in and will eventually leave behind.”

While acknowledging the desires of the individual to determine the best way to channel their finances, Tish Hanifan, founder of the Society of Later Life Advisers, points out that families may have concerns as well that form part of the bigger picture. 

"Philanthropy is becoming an accepted area of financial advice, working with clients to optimise the value of their giving as well as ensuring it is tax efficient.” 

She adds: "However, families vary in their views about more senior members ‘giving away’ assets. Some are fine with it but some have psychologically earmarked it as their inheritance, so it’s best that there are no surprises.”

Open conversations

Ben Mason, chief executive of Kinherit, which specialises in wills and end-of-life planning, echoes this view: "If someone is planning to make a sizeable donation to charity on their death, it is usually a good idea to for them to let their family know their wishes, to mitigate the risk of contestation at a later date."

Hanifan agrees: "The answer to managing the burden of future disputes is intergenerational dialogue, which is important and to be encouraged.”

Tim Morris, IFA at Russell & Co, says: "Involving clients’ children in meetings is something I always do when they are trustees.