Please see below the latest financial update from Blevins Franks. Please do not hesitate to contact Paul should you have any questions related to this or other financial matters
Take control of your finances in an uncertain world
By Paul Montague, Partner, Blevins Franks
The last few years have emphasised how uncertain life can be; how we never know what is around the corner. Brexit and the pandemic have now been followed by the worrying and upsetting events in Ukraine. Life feels more uncertain again.
This perhaps makes it more important for us to take control where we can, as much as we can, particularly when it comes to our family’s long-term future and security. So here we take a look at the key wealth management considerations we should review from time to time.
For most of us, our pension funds are key to our long-term financial security, so great care must be taken to do what is right for you and your family. The UK pension freedoms may no longer be ‘new’ but they can still cause uncertainty when deciding what you should do with yours. The more choice there is, the harder it can be to decide, and each option has pros and cons.
If you are planning to spend your retirement years in Lanzarote, you also need to establish what the tax implications are in Spain and what works best for you as a Spanish resident.
Many expatriates have chosen to transfer UK pensions to a Qualifying Recognised Overseas Pension Scheme (QROPS) for the advantages they can offer, such as income and currency flexibility. Buy they do not suit everyone – you may find it more beneficial, for example, to reinvest UK pension funds into Spanish-compliant investment arrangements, or even leave your UK pension where it is. Also, the UK has recently made changes which make transferring to QROPS more difficult.
In any case, with pensions, you should always take personalised, regulated pensions advice to ensure you take the best course of action for your particular circumstances.
Your savings and investments
It is impossible to control what may or may not happen in the markets in future, what geopolitical events may cause volatility or prices to rise; we can’t know interest rates will be five, ten, or twenty years from now.
But we can take steps to build an invest portfolio that:
- Is based around our risk profile, circumstances, time horizon and objectives, and
- Includes suitable asset allocation and diversification to control risk, and
- Is designed to provide capital growth over the longer term to beat inflation so you can maintain your spending power through retirement.
Geopolitical events, like those we’re seeing at the moment, can cause significant market turbulence which can be unsettling for investors, but that doesn’t mean it is the time for knee-jerk reactions or short-term changes.
History has shown that ‘timing’ markets is incredibly difficult, especially where out-sized market movements are involved. And in timing, an investor needs to get it right twice – when to encash some of your investments and when to get in the market. Getting one right is rarely achieved, as the news has already arrived by the time you can look to act (so markets will already have reacted). The same also applies when markets move sharply upward as we saw after the initial covid news in 2020.
Investing is a marathon not a sprint, so being patient and sticking with the plan can pay off.
While we cannot avoid death, with good estate planning we can control who receives our assets and when. Is your legacy on track to go to your chosen heirs according to your wishes and with minimal taxation? Take care to understand the succession laws and inheritance taxes in Spain and anywhere else you have assets and heirs. Also, make sure you review the pros and cons of using the EU succession regulation ‘Brussels IV’ to override local ‘forced heirship’ rules.
You need a strategy that achieves your wishes while making the process as straightforward and tax-efficient as possible for your heirs. And don’t forget your own needs; consider the tax implications to find the optimum solution for your wealth during your lifetime too.
The way you structure your assets and wealth can make a significant difference to your tax bill. You need to make sure your arrangements are structured appropriately for your life Lanzarote as well as your particular aims, circumstance, goals and risk appetite.
Are you taking advantage of tax-efficient structures available in Spain? Besides tax savings, these may offer additional benefits such as currency and income flexibility and estate planning advantages.
Ultimately, cross-border tax and financial planning is complex. While you can do some groundwork yourself, you will benefit from talking to a specialist adviser like Blevins Franks with in-depth knowledge of the Spanish tax regime and its interaction with UK rules. They can help you take advantage of available tax, investment, pensions and estate planning opportunities to ensure you do what works best for you and your family, today, tomorrow and the future.
Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.
Blevins Franks Wealth Management Limited (BFWML) is authorised and regulated by the Malta Financial Services Authority, registered number C 92917. Authorised to conduct investment services under the Investment Services Act and authorised to carry out insurance intermediary activities under the Insurance Distribution Act. Where advice is provided outside of Malta via the Insurance Distribution Directive or the Markets in Financial Instruments Directive II, the applicable regulatory system differs in some respects from that of Malta. BFWML also provides taxation advice; its tax advisers are fully qualified tax specialists. Blevins Franks Trustees Limited is authorised and regulated by the Malta Financial Services Authority for the administration of trusts, retirement schemes and companies. This promotion has been approved and issued by BFWML.
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