It is that time of the year when many people make New Year resolutions
to improve their life in one way or another.
Whether or not you make resolutions, this is a good time to consider
whether you need to review your financial planning.
To protect your financial security through retirement, and achieve your
wishes for your family and heirs, you need to have a strategic tax and wealth
management plan in place. This should
cover your savings and investments, tax planning, pensions funds and estate
planning. These should all be set up to
work together to preserve your wealth over the long-term and meet your
You need to consider any recent global and local developments that may
affect your finances in the coming year, as well as have a long-term
strategy. Any changes in your personal
circumstances could also warrant a review.
Once you have assessed your situation and
financial planning, you will be able to discuss any necessary adjustments with
your financial adviser.
2016 was certainly an interesting year, with Brexit
and US elections. More recently the
Italian referendum could add more uncertainty for the Eurozone and financial
markets. Diversification is more important than ever, and you need a long-term
strategic asset allocation plan which is specifically designed around your
circumstances, needs and risk profile.
Diversification gives your portfolio the chance
to produce positive returns over time without being vulnerable to any single
area under-performing. There are various levels you should have in your
investment portfolio -
allocation - spreading your capital across different asset classes (equities,
bonds, real assets, property, cash etc).
across geographical areas, sectors, company size etc.
equities and bonds issued by a range of companies (for example through owning a
selection of funds).
a multi-manager approach where you diversify across managers and styles.
The starting point should be to obtain a clear and
objective assessment of your appetite for risk, to make sure your portfolio is
suitable for you.
Remember that as asset prices rise and fall, your
portfolio can shift away from the one designed to match your risk profile and
objectives. You should review your
investments around once a year to rebalance it if necessary.
There are no changes to Spanish income or wealth tax for
2017 - except that the promised abolition of wealth tax has not come to pass. The income tax rates remain the same as for
2016 income and wealth tax will be applied as it has in recent years.
Make sure your investments and wealth are placed in the
most suitable arrangement to limit your tax liabilities. Take advice from someone who is well-versed
in the nuances of Spanish taxation, otherwise you could see your investment
returns slashed by taxes that could have been avoided or mitigated. It is important that your tax planning
is up-to-date and designed to take advantage of tax planning opportunities in Spain.
Another incentive to review
your tax affairs is the global automatic exchange of information regime under
the Common Reporting
Standard is now in force. The Spanish tax authority will receive
information on every resident of Spain, without having to ask for it. Cross-border
tax planning can be complex, so you need to ensure you are declaring income and
paying tax in the right country.
The first step is to establish your goals. Who would you like to benefit from your
estate? Are you happy for them to have
control over the money? When should they
receive the funds? How much tax will they have to pay on their inheritance?
You then need
to obtain specialist advice to ensure that your estate plan is specifically set
up to achieve your wishes for your heirs.
Under the EU
succession regulation Brussels IV, which came into force in August 2015, you
can choose whether Spanish or UK succession law will apply to your estate. The
default position is for Spanish succession law to apply to foreign nationals
living here, unless they have a will stating otherwise. If you do not have a
valid will, your estate may be distributed according to the restrictive Spanish
does not allow you to opt out of Spanish succession tax, which can be costly in
certain circumstances. This is due if the asset being inherited is located in
Spain or the recipient is resident in Spain. Tax is paid by each recipient, with
varying rates. Inheritances between
spouses are taxable. Also, bear in mind that UK inheritance tax may still apply
for UK nationals.
Whether it is investments, tax or pension planning,
seek advice to ensure you do what works best for your personal situation. Use an adviser who can guide you on all these
aspects and provide holistic solutions so you can have peace of mind that your
financial affairs are in order.
David Bowern, Partner, Blevins
This e-mail address is being protected from
Tel: 952 809 212
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