5 practical ways you can ensure you don’t die with too much money

One important part of our role that often surprises clients is when we encourage them to spend money.

It may sound like a contradiction but spending money can be as critical to the success of a financial strategy as saving and investing. Let’s be clear about this though, we do not encourage indiscriminate spending or spending when you’ve not fully assessed its impact.

We use our expertise, experience, and state-of-the-art financial modelling systems to determine how much you can – and should – be spending to ensure your agreed roadmap achieves your goals.

But why would we advise you to spend your money? One reason could be the risk of “dying with too much”.

1. Are you enjoying life to the full?

Wealth is not just about money. It is about having the means to enjoy life to the full, and spending your hard-earned money doing the things you always wanted to.

We understand you need financial peace of mind, and that’s why we work with you to calculate the income that is sustainable but also allows you to live the lifestyle you want.

While Covid-19 has put many restrictions on travel and socialising, when these restrictions are lifted we want to enable you to travel and fulfil your ambitions. It’s important that, when your time comes, there is nothing left on your “bucket list” you may regret not doing when you could have.

2. The joy of giving while living

Sometimes it’s not you who has a dream to fulfil. It could be your child, another loved one, or a close friend who you want to help achieve an ambition.

Giving while living, or “giving with a warm hand” as it is also known, means you get to see the joy your money can bring to others. We have seen for ourselves the happiness clients get from hearing their children talk excitedly about their new home that was partly financed by our client’s gift.

It’s often said the real joy is in the giving, and still being alive to see the impact of your gift is truly priceless.

3. Get involved in a good cause

It could also be that you want to use your wealth for philanthropy. Spending your money on local good causes or giving it to an international charity while you are alive means you can see the positive impact of your gift.

Supporting an issue that is close to your heart is always going to provide a sense of satisfaction. It may also encourage you to become more involved with the cause or charity, opening the door to new acquaintances and friends.

4. The younger the beneficiary, the greater the value

While this may not always be the case, if you give money to your children when they themselves have a young family, its likely to have much greater value.

The cost of raising children while still making their way up the career ladder often means young families have a relatively low disposable income. Luxury holidays, an extension to the house or new car could be nothing more than a dream.

But gifting money to your children at this stage in their life could turn that dream into a reality, giving it much greater value than if you pass it through your estate at a time when your children’s children have left home and overheads have reduced.

5. Potential Inheritance Tax liability if you move abroad

While Hong Kong’s advantageous tax laws means there is no Inheritance Tax liability, the same cannot be said for other countries – one of which you may decide to move to in the future or if you are domiciled or a citizen of a country with Inheritance Tax, such as the UK.

Holding on to wealth could result in a large proportion of your money vanishing on taxation under inheritance rules in countries including the UK, the United States, Japan, China, and Australia, to name a few. This could be your largest tax bill, ever.

The rules around Inheritance Tax are extremely complicated and you should always seek professional help. Some countries have “nil-rate bands” which are exempt from taxation, however any amount over the amount could be liable to high taxation charges.

It’s worth remembering that in the UK, despite the fact Inheritance Tax is one of the most unpopular taxes, the government received £5.2 billion during 2019/2020. Thanks to the latest Budget announcement by British chancellor, Rishi Sunak, the UK’s Office for Budget Responsibility predict Inheritance Tax receipts will rise to £6.6 billion for the 2025/26 tax year.

If you are thinking of retiring or moving to another country, it is essential you receive advice on possible exposure to such a tax, and ways you could potentially mitigate it.

We can create a financial strategy that is bespoke to you and could help potentially reduce the levels of Inheritance Tax on your estate.

Get in touch

As BMP Wealth specialise in building, managing, and preserving the wealth of Hong Kong’s international community, we can help you to avoid dying with “too much” money.

For more information, email info@bmpwealth.com or call +852 3975 2878.