Preparing your Finances for the Unexpected
Insights and advice from the experts at Blevins FranksBlevins Franks offers some insights on protecting your finances from the unexpected. Experts on international taxation, pensions and estate planning, their insights can help you prepare your finaces to deal with fluctuations and changing circumstances.
Not many will have foreseen the way we currently must live our lives and run our businesses. The imapct on the global economy of the Coronavirus pandemic is enormous, and that, of course, impacts our local economies and personal finances. As with most in life, preparation is key. While we may not be able to see into the future, there are steps we can take in the present to ensure we are as well prepared as possible to deal with the surpises life will throw at us.
The article below, written by the experts at Blevins Franks gives some introductory insights into preparing your finances for the unexpected. For specific and personalized advice and information, contact Blevins Franks.
Preparing your finances for the unexpected
We can all agree that these are highly unusual times. A year ago, no-one would have predicted the state of disorder that people, governments, businesses and markets find themselves in today.
2020 has thrown some particularly difficult challenges our way. At any time, however, you need to plan for what you know while trying to protect yourself as best you can from life’s surprises.
Investing in a volatile climate
Global coronavirus concerns are impacting markets in an unprecedented way, making things extremely uncomfortable for investors. Is this a bad time to invest? Should you hold your nerve if you are already invested? Unfortunately, there are no simple answers, just good investment principles.
Whatever the market is doing at any given point, the most sensible approach is have a well-diversified portfolio and invest for the long-term rather than trying to ‘time’ the market.
Certainly, from previous events such as the dramatic 1987 and 2008 market falls, we can see that short-term negative reactions are often later reversed by a strong longer-term recovery. While it may feel uncomfortable to stay invested when markets fluctuate, this usually produces better returns over the longer term.
The key is to spread investments across different regions, asset types and sectors to limit exposure in any one area, using a strategy matched to your particular situation, goals, timeline and risk appetite.
Tax planning for Portugal
While Portugal can be a highly tax-efficient home, much depends on how you structure your wealth and assets.
Although Portuguese residents can, for example, unlock significant tax advantages for capital investments, many UK expatriates overlook such opportunities in favour of retaining UK assets. This approach may become less tax-efficient when the Brexit transition period ends and the UK government gains more freedom to tax citizens abroad. With much still unknown about Brexit, explore Portugal -compliant alternatives before things potentially change.
Estate planning for Portugal
Even after Brexit, you can override local ‘forced heirship rules’ by applying the law of your nationality to your estate through the EU regulation, ‘Brussels IV’. While this would ensure your legacy is distributed according to your written wishes, this can have unwelcome tax implications.
Although Portuguese inheritance tax (stamp duty) is relatively benign, it is possible to restructure your wealth to minimise tax for chosen heirs – and even ensure they receive your legacy when you want them to – so explore your options.
With a careful strategic financial planning review – that considers your investments, tax and estate planning together – you will be best placed to prepare for what’s ahead, both known and unknown. Cross-border financial planning is complex and needs to be designed around your specific circumstances and wishes, so take specialist advice.
All advice received from Blevins Franks is personalised and provided in writing. This article, however, should not be construed as providing any personalised taxation or investment advice. Summarised tax information is based upon our understanding of current laws and practices which may change. Individuals should seek personalised advice.
You can find other financial advisory articles by visiting our website here www.blevinsfranks.com
You may also like:
- Information on tax in Portugal
- NHR - non-habitual residency in Portugal
- Changes to the NHR tax benefits