George Clooney hit the news in recent weeks regarding some gifts he made to friends. Being George Clooney these weren’t any old gifts; he gave 14 friends $1M each. In an interview he said that “….. I just thought, basically, if I get hit by a bus, they’re all in the will. So why the *!@^ am I waiting to get hit by a bus?”.
Mr Clooney made a very good point, and whilst most of us do not have the sums affordable to George, many of us may be able to afford to pass some of our wealth to our loved ones during our lifetimes. We are living longer and more and more children will be in their 60s before inheriting from their parent’s estates. Wouldn’t it be nice to be able to see the benefits that the money has on the lives of our family and friends?
However the problem for a lot of people is, knowing how much they can afford to give away? Inaction is driven by the fear of running out of money. Maybe it is the potential cost of care and a desire not to become a burden on one’s family as to why we continually see large estates ending up paying hundreds of thousands in inheritance tax. Much of that tax could be avoided and passed on through better planning.
Understanding whether you have “excess wealth” over and above your own needs is the key, and in my opinion the best way to get that understanding is through a cash flow plan. A cash flow plan helps you visualise your future financial needs and requirements. It projects your future income and expenditure and the impact this has on your savings and investments. We use cash flow plans as part of the overall financial planning service with the majority of our clients, to help them understand their financial future and the likelihood of them reaching their goals. Whether the goal is simply ensuring that they have sufficient income for a long comfortable retirement, or perhaps giving away $14M during their lifetime.