Protecting Your Assets in a Period of Uncertainty

Wishing to protect your assets during periods of uncertainty and times of crisis is completely understandable. It is during these times that thoughts turn to how best to protect estates, assets and wealth. We discuss some key considerations for individuals and businesses in this situation. We also discuss what actions can be taken now to help towards protecting your assets in the future.

Examine any tax-saving possibilities

Ironically, some of the best tax-saving opportunities can be achieved during a falling market caused by uncertain times. It is important to discuss this further with a tax specialist in order to see if there are any tax saving opportunities that are relevant to you during this time. For example, during falling markets, the amount of Capital Gains Tax on the disposal of assets will generally be less.  An element of “bed and breakfasting” of assets might be possible to “bank” a capital loss to mitigate against gains when markets pick up.

Capital gains tax often prohibits the direct gifting of assets to individuals. However, if the value of the asset decreases due to the falling market, so does the impact of capital gains tax on the gift because the tax is based on the gain and not the value gifted.  This might be an opportune time to pass assets on to loved ones with a lower tax impact.

Gifting of assets can also have an impact for inheritance tax and again, lower values might mean that assets can be passed on during lifetime with lower, or no tax.  In addition, lower values can also mean that more assets can be placed into a trust before triggering any inheritance tax if that is being considered as part of an overall plan.

For businesses, it is important to ensure that tax reliefs (such as research and development tax credits) are being claimed as this can reduce tax or even give rise to a repayment.

Cash is King

This popular saying is especially true during uncertain periods. Cash flow will always remain the lifeblood of any business or individual. Ensuring you have enough cash in the short term is more important than profitability when protecting your assets as it helps ensure that businesses can continue.

Having good control over cash flow is always critical, but now more than ever. Having efficient cash flow management practices in place will enable you to effectively forecast your balance sheet in advance, ensuring you have enough liquidity to pay your overheads, and hopefully ensuring that you also have sufficient reserves in place.

If you have credit available, then, take advantage of this help your business move forwards.

Review your budget

Review your budget in minute detail and see where cuts can be made. This is a difficult task, but it is vital you stick to the absolute necessities. Cut out anything that is not detrimental to the business, just for the short term initially. Instead of overspending and having to deal with the consequences later, by spending time now to cut costs will help protect your assets and wealth in the future. You can review these expenses on a regular basis to ensure they are accurate and all still necessary.

Any strategy aimed at protecting your assets should include a cash buffer to help ride out tough times. Liquidating assets is never ideal and can be complicated. Therefore, by having a cash buffer to hand can help minimise the impact and can help protect and secure your financial future.

Of course, at the present time, it is important to ensure that any government assistance in the form of furlough claims, self- employment grants etc is being claimed if applicable.

Diversify and Adapt

No matter what the current climate is or the state of the market, it is important for businesses to adapt wherever possible. For example, a business may need to restructure their prices. For example, If a business charges their clients a one-off annual fee, it may be worth considering changing this to a lower, monthly fee instead. Or have a discount for early payment (or a penalty for late payment).

It is key to have a diverse portfolio if possible. This is the case for both investors and businesses. If this is not the case, try and have a diversification plan in place for any future turbulence.

Uncertain times can be the best time to discover potential new clients. For example, by offering a slightly different service, e.g an online service.

This may seem like a daunting task. But diversity will ensure a more stable position moving forwards and making your more resilient.

Plan for the future

It is never too early or too late to plan for the future. Unprecedented times can help trigger the need to plan further in advance. Reviewing an existing will or implementing a new one is a key thing to consider, despite it not being pleasant.

It is important wherever possible, to speak to family and loved ones in order to ensure assets pass onto the intended beneficiaries in the most tax-efficient way possible.

After the uncertain period passes, you will be grateful that you have used the opportunity to address this matter rather than putting it off.

Although it can be morbid to consider, having a plan in place can help reduce stress, expenses and uncertainty.

Get professional advice

Life is unpredictable. When it comes to protecting your assets and wealth, instability can have devastating effects. By being strategic and planning for wealth protection during uncertain times can help you safeguard yourself against financial insecurity.

Financial advisors are always there to help, especially during these difficult times, when there is a lot to consider financially. They are able to offer support and guidance to monitor cash flow, manage accounts, protect cash businesses and offer advice.

Not all businesses will weather the storm. Early realisation of the situation will help ensure that the business is closed down in the most beneficial and tax-efficient way possible for the owners.  This will help to ensure that overall wealth is impacted as little as possible.

We understand that we are in the middle of a difficult time and it can be overwhelming for many businesses. During uncertain periods it is important to be aware of how to protect your assets for the future. Fortunately, there still are plenty of ways to do this. Our team are here to help you, especially during these unprecedented times. Call us on 0845 880 5678 or email us on website@wrightvigar.co.uk