Is your financial planning suitable for living in Cyprus and on track to protect the long-term financial security for you and your family?
While you can, of course, review your financial planning at any time to ensure it is on the right path, early on in the year is a great time to do so if you have not taken a fresh look for a while.
A key reason to review your wealth management is to confirm if it is all up to date. Establish whether any changes in tax rules, financial regulations, or your own personal circumstances mean you should adjust your arrangements. However, to ensure everything is suitable for your life today and future plans, your review needs to go beyond this.
The bigger picture
Many people only consider segments of their finances at a time. They may have bought shares in companies they like or invested in funds recommended by an adviser years ago. They may speak to a tax accountant about Cyprus taxation and to a lawyer about Cyprus wills. At some point they look at their pensions and try and work out how best to access their retirement savings.
For a truly effective review, and to ensure it is suitable for your life in Cyprus, consider how your tax planning, investments, pensions and estate planning work together. Here are some key considerations.
Residency and taxation
Start by confirming where you are resident for tax purposes, especially if you are new to Cyprus or spend time in two countries. You then want to structure your assets in the most suitable way to minimise taxation – in Cyprus, the UK and wherever you have financial interests – in way that still meets your obligations.
Regardless of how effective your tax planning in the UK was, you pretty much need to start afresh in Cyprus. Explore the tax advantages Cyprus offers and the compliant opportunities available here, to establish what would work for your situation and aims and how much tax you could potentially save.
Do not leave estate planning to the final stage of financial planning. It is vital to review your estate planning when living in Cyprus, as its succession regime works very differently to the UK.
Are you aware, for example, that the local succession rules protect the right of inheritance of certain heirs, and only the disposable portion of your estate can be freely distributed through your will? You need to establish how this will apply to your family and whether it ties in with your wishes or not.
You can however specify in your will for the EU regulation ‘Brussels IV’ to apply the relevant British law to your estate instead, but first take care to understand your options and any tax implications.
Financial structuring for life in Cyprus
Perhaps the key rule for financial planning is that it must be specifically structured around your personal circumstances – your lifestyle today and plans for the future, family situation, income requirements, objectives, time horizon, and risk tolerance.
If you don’t already have a financial plan in place for Cyprus, or you haven’t reviewed your savings and investments recently, you need to check they are suitable for you today and the current economic climate. Have you sought to protect your retirement savings from long-term inflation? Do they have the right balance of risk and return and adequate diversification? Can they provide income without risking the capital? Could you consolidate shares and funds so they are easier to manage?
At the same time, consider your tax liabilities on investment income and gains, and whether you could take advantage of tax-efficient arrangements as a resident of Cyprus. Also, how will these savings be passed to your heirs and will they pay tax? While there is no inheritance tax in Cyprus, many British expatriates remain liable for UK inheritance tax. Can the funds be passed on directly or will there be a lengthy probate process?
And when deciding what to do with your pensions, take regulated advice to carefully to explore all your options to establish the most suitable approach for you.
Financial planning for Cyprus – pulling everything together
Every family is different. Your strategic financial planning must be carefully designed for you. All the various aspects should work cohesively together to create an overall wealth management plan that provides long-term financial security for yourself and achieves your wishes for your heirs.
For peace of mind that you have covered everything, and that making one financial decision will not have unexpected consequences on another, take specialist, cross-border advice.
Ultimately, spending time on a financial health check now can help ensure you and your family are in the best financial position to enjoy a prosperous 2024 and beyond.
Contact Blevins Franks today to arrange a personal consultation.