Blog Archives - E S Walton

6 origins of financial bias that could affect you

Bias can affect the decisions you make, including financial ones. But how are biases formed? Research suggests numerous factors influence biases, including the following six.

1. Evolutionary psychology

Some forms of bias go back millennia and allowed early humans to prioritise safety. The ability to make quick decisions could have been the difference between survival and extinction.

This survival instinct may have helped early humans, but it’s often at odds with making rational decisions today. One example is the endowment effect – a cognitive bias where people place a higher value on an item they already own.

A research article from Vanderbilt Law School (15 September 2025) suggests that the endowment effect is not only present in humans but in non-human primates. The bias had a greater effect on primates when food, rather than toys, was involved, which would have greater implications for survival. The author suggested that evolutionary theory might predict such biases.

2. Your personal experiences

The experiences you have will shape how you approach information and the decisions you need to make.

Experiencing financial stress during your childhood could mean you’re more likely to be risk-averse because you subconsciously worry about financial security. Alternatively, if your first foray into investing is successful, this could lead to overconfidence and taking more risk than is appropriate.

It can be difficult to predict how experiences will lead to biases. Two people could experience similar events but respond very differently to them. However, examining your approach to managing your finances could reveal the ongoing influence of certain experiences.

3. Mental shortcuts

To save energy, your brain also makes mental shortcuts, known as heuristics.

These shortcuts help you make decisions quickly, and they can also distort your judgment. For example, when making a financial decision, you might be affected by anchoring. This is where you focus on an initial value or reference point.

In the context of investing, this may mean you anchor a particular share’s value to the price it had when you first saw it. Even when new information becomes available, this anchor affects how you view the potential opportunity.

4. Emotions

Your emotional state can strongly influence how you feel about your finances and options.

For example, if you read about an investment opportunity in the newspaper, excitement and the fear of missing out could lead you to invest before you’ve fully weighed your options. As strong emotions are often short-term, acting on emotional impulses could lead to regret in the future.

5. Social influences

It can feel safer to be part of a crowd. If it seems like everyone else is investing in a particular asset or sector, it can be tempting to follow along. You might feel like all those people can’t be wrong, and you’d be missing out if you don’t follow suit.

As your goals and circumstances can vary significantly from others, including family and friends, following the crowd could lead to decisions that aren’t right for you.

Market bubbles demonstrate the effect social influences can have.

In the late 1990s, eager to invest in the internet, investors drove technology stocks to record highs. Indeed, the US technology-focused index, the Nasdaq, went from under 1,000 points in 1995 to more than 5,000 in 2000, according to Investopedia (10 August 2025).

The market suffered a dramatic correction in the early 2000s as it became clear shares were overvalued – it took 15 years for the Nasdaq to surpass the high recorded during the dot-com bubble.

6. Information framing

How information is presented to you can affect how you view it.

Imagine you’re looking at three different fund options for your pension. One is in the centre with bold text in a coloured box to draw your attention. The other two are on plain white backgrounds. Even though the attention-grabbing fund might not be right for you, the way it’s framed could mean you choose it.

Being aware of framing and its effects could be incredibly useful next time you’re making financial decisions.

Contact us

Working with a financial planner could help you identify when bias might be affecting your financial decisions. Contact us to discuss your financial plan and what you want to achieve.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Investment market update: November 2025

One of the biggest factors affecting investment markets in November 2025 was concern about an AI bubble. Despite this, there were still market highs recorded during the month.

Remember to consider your risk profile when you invest and review your portfolio’s performance with a long-term outlook.

AI concerns led to volatility throughout November 2025

With UK chancellor Rachel Reeves set to deliver a fiscal Budget at the end of the month, speculation led to market volatility on 4 November. Indeed, the FTSE 100 fell during a speech Reeves delivered, but clawed back most of the losses, with shares in housebuilders rising.

On 5 November, worries that AI stocks were overvalued led to global volatility.

In Europe, the falls were modest, with London’s FTSE 100 down 0.1%, and Germany and Spain’s main indices both declining by 0.8%. The falls were more dramatic in Asian markets, including Japan’s Nikkei (-2.5%) and South Korea’s KOSPI (-2.85%).

The US technology-focused index, Nasdaq, was also down 2%. All of the “Magnificent Seven” – seven of the largest and high-growth companies in the world, made up of Nvidia, Amazon, Apple, Microsoft, Tesla, Meta, and Alphabet – suffered falls.

On 7 November, Wall Street continued to fall amid economic and valuation worries. The Dow Jones index, which consists of the 30 largest US companies, was down 0.45%, while the broader S&P index fell 0.6%.

The Financial Times calculated that $750 billion (£566 billion) was wiped off major AI stocks – including Nvidia, Meta, Palantir, and Oracle – in the first week of November.

Hopes that the US government shutdown was coming to an end led to both US and European markets rising, including London’s FTSE 100 hitting a new high on 10 November.

The rally continued in London, with the FTSE 100 hitting a record high on 12 November, nearing the 10,000-point mark for the first time. The biggest riser was energy company SSE. Its share prices jumped 11% after the firm announced a five-year investment plan.

Concerns about an AI bubble reared again on 14 November, with indices down globally, and the tech sell-off continued on 15 November.

Google’s boss warned that “no company is going to be immune” if an AI bubble burst happens. The FTSE 100 fell 1%, with mining companies Fresnillo (-6.4%) and Endeavour Mining (-4.7%) among the biggest losers. It was a similar picture across the wider European market, with the main indices in Germany, France, Italy, and Spain all experiencing volatility.

There was some investor relief on 20 November when AI firm Nvidia revealed its sales were up 62% year-on-year. The company beat expectations and reported revenue of $51.2 billion (£38.6 billion) from data centre sales in the third quarter of 2025. The firm expects revenue to reach $65 billion (£49 billion) in the final quarter of 2025.

The news led to Asian-Pacific markets soaring, including Japan’s Nikkei (2.6%), South Korea’s KOSPI (2%), and Taiwan’s TW50 (3.6%). Wall Street also rallied, and the Nasdaq was up 2.18%.

The UK’s Budget also affected markets, particularly the FTSE 100.

Ahead of the speech, it was reported that UK banks would be spared a tax raid, which led to shares in the sector jumping on 25 November. Among those benefiting were NatWest (2.2%), Barclays (2.9%), and Lloyds Bank (2.95%)

Betting companies didn’t fare so well. The chancellor revealed a new tax hike on gambling firms, which led to shares sliding on 27 November. Rank Group told its shareholders it expected a hit of around £40 million to its annual operating profit, leading to shares falling by 10%. Similarly, Evoke shares fell 5% after it estimated duty costs would increase by around £125 million a year.

UK

Inflation in the 12 months to October fell to 3.6%, suggesting it has peaked.

The Bank of England (BoE) opted to leave interest rates where they are, but the latest inflation data suggests a cut could happen before the end of 2025 or at the start of 2026. Indeed, Goldman Sachs predicts interest rates will fall to 3% by July 2026.

Economic growth was disappointing. Between July and September 2025, GDP increased by just 0.1%. Once GDP is adjusted for population growth, it remained unchanged when compared to the previous quarter. The figure is the slowest quarterly growth recorded since the short recession experienced in the second half of 2023.

The BoE’s data suggests that economic growth will pick up in the final quarter of 2025. The economy is expected to grow by 0.3% between October and December.

Official data also shows the impact of US trade tariffs on economic growth.

In September, the value of UK exports to the US fell by £500 million, or 11.4%, to the lowest level since January 2022. More broadly, UK goods exports fell by £1.7 billion, a 5.5% decrease. This led to the trade deficit widening to £59.6 billion in the third quarter of the year.

However, there was some good news, with UK factory output rising for the first time in a year. S&P Global’s Purchasing Managers’ Index (PMI) was 49.7 in October. While this is still below the 50 mark that indicates growth, it’s heading in the right direction.

Europe

The European Commission has increased its growth forecast for the eurozone economy.

The eurozone is now expected to grow by 1.3% in 2025, compared to the earlier spring forecast of 0.9%. The upward revision was linked to a surge in exports as companies tried to beat incoming tariffs. Looking ahead, the European Commission anticipates growth of 1.2% in 2026 and 1.4% in 2027.

As the largest EU economy, Germany’s economy plays an important role in the bloc. However, it’s a gloomy picture.

The German Economic Council revised its 2026 growth forecast down to 0.9%. In addition, an Ifo report found that German business morale is low, as companies lose faith in the economic recovery.

US

On the surface, US manufacturing data appears positive, with output and new orders rising, according to S&P PMI data. However, Chris Williamson at S&P Global Market Intelligence said the underlying picture is “not so healthy”. He explained there was an unprecedented rise in unsold stock due to weaker sales, especially in export markets.

Job data also appears positive initially. Official figures show more than 119,000 jobs were created in September, helping to recover from a summer lull. The figure is more than twice the number expected.

However, data from recruitment firm Challenger, Gray & Christmas, suggests the data could be very different in October. The firm suggests job cuts hit a 22-year high as employers embraced AI, which led to employers shedding more than 153,000 jobs in October – up 175% when compared with 2024.

Asia

Economic data from Japan revealed the economy contracted in the third quarter of 2025. The country’s GDP was down 0.4% between July and September when compared with the same period a year earlier. The fall was partly linked to exports falling 4.5% when compared with 2024 amid US trade tariffs.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Is the default pension fund right for you?

How your pension is invested will affect its value and the income it will provide you later in life. If you’ve put off reviewing your pension fund, find out why it could be a worthwhile task.

While most pension providers offer savers plenty of fund options to choose from, many leave their money in the default option. Indeed, according to PensionBee (19.02.2025), more than 90% of pension savers remain in the default fund.

When you start contributing to a pension, you will usually be paying into the default fund option. This is convenient, as you don’t need to do anything, you simply make your contributions and the money will be invested through this fund.

The default fund is designed to be suitable for most savers, but it doesn’t consider personal circumstances or long-term plans.

Practical reasons the default pension option might not be right for you

The default fund doesn’t align with your risk profile

One of the main reasons you might choose to switch your pension fund is if the risk profile of the default option doesn’t suit your financial goals or circumstances.

For example, if you’re young and have decades until retirement, a default pension fund might be more risk-averse than is appropriate for you. As a result, you could miss out on investment returns, which, thanks to the power of compounding, may mean the size of your pot is significantly smaller at retirement than it had the potential to be.

According to the PensionBee research, a worker earning £25,000 a year at the age of 21 who benefits from a 2% average annual salary increase, and contributes 8% of their salary, would have £194,185 in their pension at age 68 (after an annual management charge of 0.7%) if their pension returned 3% a year.

If this individual changed their pension fund and received a 7% annual return, their pension would reach £697,247 over the same period. The higher returns could make a dramatic difference to the retirement lifestyle you can afford.

Before you switch your pension to a fund with a higher potential return, remember to balance the risks and assess what’s appropriate for you. Investment returns cannot be guaranteed, and typically, the higher the potential returns, the greater the risk.

As your financial planner, we can work with you to assess which pension fund is right for your circumstances and goals.

You are paying higher fees in the default fund

The fees you pay to your pension provider will affect the value of your pension. Take some time to review the fees you’re paying now and whether alternative options could reduce these charges.

Often, you’ll pay an annual management charge, which is typically a percentage of the value of your pension. You might also pay management or service fees.

Over the decades you’ll be saving for retirement, even a small difference in the fees you’re regularly paying could have a sizeable effect on the value of your pension when you retire.

You want your pension investments to reflect your values

Alongside financial factors, some investors may choose to consider ESG (environmental, social, and governance) factors. This could align your personal values with your financial decisions. For example, you might want to ensure your pension isn’t invested in fossil fuel companies if you’re concerned about climate change.

Pension providers will usually offer one or more ESG funds for you to switch your pension to. However, you should note that the aim of the funds can vary, and the investment decisions might not perfectly align with your values.

In addition, it’s still important to consider your risk profile and other financial factors when deciding if an ESG fund suits your needs.

Switching your pension is usually simple

The good news is that pension providers usually offer a range of funds with different risk profiles and goals. If the default pension fund isn’t the right option for you, you can often switch online in minutes.

When comparing options, you may want to look at the risk profile, the aim of the fund, and what the fund is invested in.

If you’d like to talk to a financial planner about the different investment options offered by your pension provider, and which might be right for your goals, please get in touch.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Explained: The new Cash ISA rules and what they mean for your savings

In the November 2025 Budget, the chancellor revealed new Cash ISA rules that will affect under-65s. The change could affect your savings and wider financial plan.

ISAs provide a tax-efficient way to save and invest, making them an essential part of many financial plans. In 2025/26, you can add up to £20,000 to ISAs and split the money across savings and investments however you wish. This will change from April 2027.

The Cash ISA limit will fall to £12,000 for most savers

The ISA annual allowance will remain at £20,000. However, for most savers, the amount you can place in a Cash ISA will fall to £12,000 in April 2027. So, if you want to use your full £20,000 allowance, you will need to place at least £8,000 in a Stocks and Shares ISA.

According to government figures (4 December 2024), there were around 12.4 million adult ISA subscriptions in 2022/23. Of these, 63.2% were Cash ISAs. As a result, some savers may wish to review their financial plan.

Over-65s will not be affected by the new Cash ISA rules, and will be able to add the full £20,000 allowance to a Cash ISA.

Despite speculation that the tax advantages of ISAs would be changed in the Budget, this didn’t materialise. The interest or other returns your money earns in an ISA will continue to be free from Income Tax or Capital Gains Tax.

Cash savings held outside of an ISA could be liable for Income Tax

Those who want to add more than £12,000 to their savings in a tax year might consider doing so outside of an ISA in light of the changes. This could lead to an unexpected tax bill.

The amount of interest on which tax might be due depends on the rate of Income Tax you pay. In 2025/26, the Personal Savings Allowance (PSA) is:

£1,000 if you’re a basic-rate taxpayer
£500 if you’re a higher-rate taxpayer
£0 if you’re an additional-rate taxpayer.

As a result, you may pay tax on the interest if your savings are not held in a tax-efficient wrapper, such as an ISA.

For example, if you’re a basic-rate taxpayer and receive £2,000 in interest on savings held outside a tax wrapper in 2025/26, you’d be liable to pay tax on the £1,000 that exceeds the PSA at 20%, resulting in a £200 bill.

During the Budget, it was also announced that the rate of tax you pay on savings income will rise by 2% from April 2027. So, if you exceed the PSA in 2027/28, the rate of tax you pay on the portion above the threshold will be 22%, 42% and 47% for basic-, higher-, and additional-rate taxpayers respectively.

Investing in a Stocks and Shares ISA could be right for some savers

There are times when holding money in cash makes sense – for instance, if the money will be used for a short-term goal or held in case of an emergency.

However, investing may be appropriate for long-term objectives, and the new ISA rules could be a useful reminder to check if a Stocks and Shares ISA is suitable for you.

You can invest in a range of assets through a Stocks and Shares ISA and choose a risk profile that suits you. Investment returns cannot be guaranteed, but they have the potential to outpace inflation to deliver growth in real terms.

Indeed, according to figures from Unbiased (4 February 2025), between 2015 and 2025, the average Cash ISA has delivered an average return of 1.21%. The average returns of a Stocks and Shares ISA were 9.64% over the same period.

If the new ISA rules mean you need to adjust your financial plan, you could benefit from moving some of your money into a Stocks and Shares ISA. You should be aware that investing carries risk, and it’s important to understand what level of risk is right for you.

Contact us

If you have any questions about the new ISA rules or would like to talk about other announcements made in the 2025 Budget, please get in touch. We’re here to help you understand what the changes mean for you and your long-term plan.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

How cashflow planning turns numbers into possibilities

When you’re making financial decisions, it can feel like you’re faced with indecipherable numbers. You might know how much you have in your bank account or pension, but what does the figure mean for your future? Cashflow planning can turn the numbers into possibilities.

If you feel uncertain about your future after looking at numbers on a spreadsheet, read on to see how cashflow planning could help.

Not understanding your finances could place your future at risk

It’s easy to make assumptions or use guesswork when you’re trying to understand your long-term finances. After all, it’s often complicated.

Take your pension, for example, when you’re calculating your retirement income. Not only do you need to consider its current value, but you might also need to include:

The contributions you and your employer are making
Compounding investment performance over decades
The income you want in retirement and how it might change
How long your pension will need to provide an income
The effect of inflation on your income needs in retirement.

Using guesswork could mean your expectations for retirement don’t align with reality.

If you’ve incorrectly calculated that you can take a greater income, you could face a shortfall later in life. Alternatively, lack of clarity might mean you miss out on opportunities that were within reach because you’re being more frugal than necessary.

It can be difficult to understand what will be possible in the long term, or what effect the decisions you make today will have on your future.

Cashflow planning takes the numbers and creates a dynamic picture

The numbers are an important part of cashflow planning, but the output could be more useful. When working with your financial planner, you can use cashflow planning to create a dynamic picture of your wealth and how it might change.

To start, you’ll need to input the details the cashflow plan will use. This might include the value of your assets and spending habits. You can then make assumptions based on your circumstances, such as what investment returns you can expect each year.

The result is a visual model of how your wealth might change throughout your life.

It’s important to note that the result of cashflow planning cannot be guaranteed. However, it can provide valuable insight into how to use your assets and offer peace of mind.

Once you have created a tailored cashflow plan, it’s time to explore possibilities.

Cashflow planning lets you “test drive” different possibilities

Your cashflow plan can help you take control of your future by allowing you to “test drive” different options to understand what’s right for you.

Let’s go back to your retirement plans. At the moment, you might plan to work until you’re 60 and draw a modest income. A cashflow model could let you see the effect of retiring earlier or withdrawing a larger income at the start of retirement to tick off some of the bucket-list items you’ve always wanted to do.

You might find you’re able to achieve far more in retirement than you expected.

Cashflow planning can be useful at other life stages as well. You might use it to assess the effect of taking a sabbatical to explore the world in your 40s, or to see if you’re in a position to cover private school fees for your family.

Your cashflow plan can also be useful when you want to stress test your financial circumstances.

If you’re worried about how you’d cope should you need to take an extended period off work, or how the inheritance you leave for loved ones might be affected if you need support later in life, a cashflow plan could show you the effect. With this information, you can take steps to protect your plans.

By understanding all the possibilities and how to reach your goals, you might be able to achieve dreams you previously thought were out of reach.

While cashflow planning incorporates the numbers you see in your accounts, it’s about finding out how you might use your wealth to live the life you want.

Get in touch

Please contact us to discuss how we could work together to understand what’s possible for your future and how you might use your wealth to achieve it.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate cashflow planning.

Phasing into retirement: 5 essential financial considerations

Phasing into retirement: The emotional and financial benefits

Last month, you read about how retirement is changing, with almost half of workers aged over 50 exploring phasing into retirement. There are plenty of reasons why more people are considering a gradual retirement, including the emotional and financial benefits this option could offer.

A gradual retirement could help you retain a sense of purpose and social life

When thinking about retirement challenges, most people focus on having enough to live on for the rest of their lives. The emotional challenges may be overlooked.

Retirement is a significant milestone and can change your lifestyle completely. If you retire on a set date, you may go from a fixed routine to the freedom to spend your time however you wish within a single day. While that might sound like bliss and something you’ve been looking forward to, it’s not uncommon to struggle with it initially.

An October 2017 survey by the Centre for Ageing Better and the Calouste Gulbenkian Foundation found that 20% of UK adults who had retired within five years said they found the change difficult.

Those planning to retire within five years of the survey also reported concerns, including:

Feeling bored (33%)
Missing social connections from work (32%)
Losing their purpose (24%)
Feeling lonely (17%)

Age UK research from December 2024 further demonstrates the challenges some retirees face. It found that 7% of people aged over 65 – the equivalent of around 940,000 people – often feel lonely.

Phasing into retirement could help you retain your sense of purpose and social circle while benefiting from more free time to pursue your passions or simply enjoy a slower pace of life.

Phasing into retirement could support your long-term finances

There are two key reasons why taking a gradual approach to retirement could be beneficial from a financial perspective.

First, if you’re still earning an income, you might not need to draw money from your pension or deplete other assets. As a result, you’ll have more to fund your lifestyle once you give up work completely.

In some cases, your salary will be lower when you’re phasing into retirement, so you might take an income from your pension to supplement it. While you’d be reducing the value of your pension, it’s likely to be at a slower rate than if you weren’t working at all.

Second, you may opt to continue contributing to your pension while you’re transitioning. Again, this could mean your pension is larger when you need to cover more of your expenses in the future.

It’s important to note that if you take a flexible income from your pension, the amount you can contribute tax-efficiently could fall to just £10,000 in the 2025/26 tax year under the Money Purchase Annual Allowance. If you plan to contribute to your pension as you phase into retirement, we can help you assess how to do so tax-efficiently.

Managing your finances if you’re gradually retiring can be complex. You might be juggling multiple incomes, and you’ll also need to consider how your decisions could affect your long-term security.

Working with your financial planner to create a cashflow model can provide clarity. It’s a useful tool that could help you assess the effect of your decisions, so you can feel confident about your finances.

For example, you might use a cashflow model to see if you have enough in your pension to halt contributions earlier than planned so you can phase into retirement. Or you could see how the value of your pension will change if you withdraw £20,000 annually for five years to supplement your salary before taking an annual income of £40,000 when you stop working.

While the results of a cashflow model cannot be guaranteed, it does provide useful insight to help you make informed decisions about retirement or other financial matters.

Contact us to discuss your retirement plan

We can help you create a retirement plan that reflects your lifestyle goals, including phasing into retirement. Please get in touch to discuss the next chapter of your life.

Next month, read about some important financial considerations if you’re planning to phase into retirement, such as when to access your State Pension and how to manage tax liability.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate cashflow modelling.

How the benefits of your financial plan go beyond you to your family

The difficult but important estate planning conversations to have with your family

An estate plan sets out how you’d like your assets to be managed and distributed during your life and when you pass away. It often involves thinking about difficult topics, such as what your funeral preferences or who you’d like to receive heirloom possessions.

Once you’ve created an estate plan, it can be tempting to put it to the back of your mind.

However, both you and your loved ones could benefit from discussing the contents of your estate plan. While these topics can be challenging and emotional to bring up, they could be a valuable way for you and your family to align on your understanding and expectations.

Here are three conversations you might want to have with your loved ones about your estate.

1. How your assets will be distributed when you pass away

Many people decide not to share how their estate will be distributed when they pass away. According to a September 2025 article from FTAdviser, 36% of UK adults don’t know what their parents’ inheritance plans are.

There are several reasons why you might choose to discuss the contents of your will.

One key reason is that it can help your loved ones effectively plan their own long-term finances. Understanding what they’ll inherit could allow them to make informed decisions.

For example, if your child is expecting a substantial inheritance, they might plan to rely on it for retirement rather than contributing to a pension. If the expected inheritance doesn’t materialise, they could face hardship later in life. By being aware of your wishes, they could take steps now to ensure they’re able to retire comfortably.

Another reason to have an open discussion is that it could reduce the chance of your will being contested.

An April 2025 article from Today’s Wills & Probate noted there was a 5% increase in contested wills reaching the courtroom between 2022 and 2023.

Speaking to your loved ones now gives you a chance to explain your wishes, reduce the risk of someone feeling blindsided, and address potential disputes.

2. Your Inheritance Tax position

If your estate may be liable for Inheritance Tax (IHT), it can be valuable to discuss the potential bill and any steps you’ve taken to mitigate it – especially if a family member will act as your executor.

Loved ones may be uncertain about IHT and how it might affect their inheritance. Having a discussion now about your IHT position could put their mind at ease.

Your chosen executor will be responsible for handling your estate, including selling assets, such as property or investments, and reporting the value of your estate to HMRC. They will also be responsible for paying IHT on behalf of the estate. Consequently, gaining a clear understanding of your tax strategy could make the process less stressful and ensure that any steps you’ve taken to reduce the bill aren’t overlooked.

3. Your wishes if you lose mental capacity

Your estate plan isn’t only about how you’ll pass on assets, but how you’d like your affairs to be managed if you’re unable to oversee them later in life.

Thinking about losing mental capacity can be emotional, but talking about your wishes can provide your loved ones with valuable guidance.

As part of your estate plan, you might give someone you trust Power of Attorney (POA), which would give them the power to make decisions on your behalf.

There are two types of POA, covering financial affairs and your health and wellbeing. You might want to talk to loved ones about topics like:

Your preferences if you need care later in life
Where your assets are held and how they should be managed
Under what circumstances you would prefer to receive life-sustaining treatment.

Your financial planner can help you tackle estate planning conversations

You don’t have to tackle these difficult conversations alone. Sometimes, having an impartial third-party present could be useful.

For example, we can be on hand to answer your family’s questions about acting as an attorney, managing an inheritance effectively to reflect their goals, or understanding how assets will be distributed to minimise potential disputes.

While having discussions about your wishes for later in life or when you pass away can be challenging, they can provide clarity for both you and your family. Please get in touch if you’d like to talk to us about your estate plan.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority doesn’t regulate will writing, Power of Attorney, Inheritance Tax planning or estate planning.