‘This should be easy’ – well, that’s what I thought – but I was wrong. Most people think that when it comes to spending money they would have no problem, but for many the reality of parting with your savings is far more challenging. Let me explain.

The Spending plan we’re talking about is very personal – it’s your plan for what to do with your life savings – that’s the cash value of everything you’ve accumulated in life. Not sure how much that is? – here’s a simple test. If HMRC takes it into account when determining your inheritance tax bill, it’s in. So that will include your property, possessions, savings and investments – plus anything you’ve given away in the seven previous years. And if that total is in excess of £1m then you definitely need a Spending Plan.

So, what is a Spending plan? – not what you might think. Most governments say that if your assets exceed a certain amount then they want their share – in the UK that is currently 40%. This is a voluntary ‘additional tax’ that you pay on assets that have already been taxed, simply because you do not have a Spending Plan.

I’ve heard people say paying extra tax is the right thing to do, if you’ve been successful in life, or just been lucky, then why not pay a little more? If you are serious about that then you really need a Spending Plan!

The spending plan is a plan for how you want to use your assets that could include:

• Spending money on ‘living’ rates, food, household expenses
• Spending money on yourself – meals out, entertainment, pampering, holidays, whatever (but not ‘toys’ – they are just another asset)
• Spending money on those you care about
• Estate planning – passing money on – but in a planned, responsible way where it does good, not just for your family, but in whatever way you see fit.
• If you want to pass it to the government, do so, but do it as a gift for a specific purpose.

Why is it so difficult? – because none of us know, for sure, what the future holds. As a result, and probably for the very reasons that put us in this privileged position, we tend to be conservative and hold on to everything.

If you think you need a Spending Plan speak to EML, we don’t tell you what to do but we do understand the issues and challenges you face and will work with you to create a plan to make the most of what you have worked so hard to create.