The economic downturn has highlighted the value of regularly reviewing financial matters. At a time when many are seeing their wealth eroded by falling asset values it is important to take proper advice to ensure that as much as possible remains available to be passed on to the next generation. It is vital, however, that such advice can take account of all aspects of your affairs.

 

The downturn is not all bad news. It offers tax planning opportunities that might be of significant benefit to families in the medium term.

 

In particular, the fact that the value of some assets has fallen recently might make this an appropriate time to consider giving them to the next generation. Making gifts, while asset values are relatively low, could minimise the associated capital gains tax and inheritance tax.

 

Similarly, the inheritance tax treatment of certain types of family trusts can be fixed for the first 10 years by reference to the value of the assets when the trust is created. Now might therefore be a good time to consider such trusts particularly for assets that might increase significantly in value over the next few years as the economy recovers.

 

On the subject of trusts, due to changes in tax laws over the past 2 or 3 years, existing trusts and wills may need review. The introduction of new rules in October 2007 under which the unused inheritance tax ‘Nil Rate Band’ of one spouse can now be transferred to his or her widow or widower, means that some wills containing trust provisions may no longer be appropriate.

 

A consequence of the credit crunch has been an increasing number of disputes in relation to wills, estates and trusts. People who feel hard pressed financially are more willing to argue over money that might have seemed less important in more affluent times. Sometimes such disputes arise because someone’s expectations of what they will receive do not match the reality. Expert advice and careful drafting are necessary if expensive problems are to be avoided later on.

 

Falling asset values can have an impact on finances relating to divorce, whereas specialists in planning and development law might see new opportunities opening up. Many company and commercial clients will also want clear advice from commercial, commercial property and employment lawyers about how best to cope with these difficult times.

 

The clear message is that while the natural response to the downturn might be to seek to cut costs, proper advice from solicitors who are able to consider the whole spectrum of your affairs is more valuable than ever.