Mike Pugh on Unlocking Estate Planning and Wealth Protection.

In a recent episode of the Self-Unemployed Podcast, host Colin Munro sat down with Mike Pugh, a professional estate planner, to dive into the world of estate planning, wealth protection, and ensuring financial security for future generations. Mike Pugh, founder of MP Estate Planning, specializes in helping individuals protect their assets from common threats like taxes, divorce, bankruptcy, and care fees, ensuring wealth is preserved and passed down efficiently. Here’s a summary of the key takeaways from their insightful conversation.

Estate Planning: The Forgotten Fourth Phase of Wealth Building with Mike Pugh

Colin introduces the episode by discussing the four phases of wealth building:

• Stop money working against you,
• Start money working for you,
• Take on calculated risks, and finally,
• Protect your wealth.

Mike fits perfectly into the fourth phase, which, as he points out, is often overlooked until it’s too late.

As Mike humorously notes, “I’m the death and taxes guy,” referring to the fact that while no one likes to talk about these subjects, planning for them is crucial. His role as an estate planner is to ensure that people’s hard-earned assets are protected from avoidable losses and efficiently passed down to loved ones.

Mike Pugh on Estate Planning, and Why Is It Important?

Estate planning involves organizing the legal framework and documents required to manage and transfer assets. It’s not just about creating a will—though that’s important—but about leveraging trusts and other legal tools to protect wealth from modern threats like taxes and legal claims. As Mike points out, the landscape has changed significantly from what our parents and grandparents experienced, making estate planning more crucial today.

Without proper planning, people may end up paying a significant portion of their wealth in taxes, or worse, losing assets due to unforeseen circumstances like lawsuits or divorce. Mike emphasizes that “rule number one is don’t lose the money.”

The Power of Trusts: More Than Just Tax Avoidance

Many people have heard of trusts but often don’t fully understand what they are or how they work. Mike explains that trusts are legal agreements between two or more parties to hold assets for the benefit of a third party. Trusts are incredibly versatile and can be used to protect assets from external threats, such as divorce or bankruptcy, as well as to reduce inheritance tax.

Mike delves into the history of trusts, which date back to the Crusades and the UK’s courts of Chancery. Despite their ancient origins, trusts remain one of the most powerful tools for wealth protection today. They are not just for the ultra-wealthy—anyone with assets to protect can benefit from establishing a trust.

Who Should Consider Estate Planning?

If you have any assets—whether it’s property, savings, or investments—you should consider estate planning. Mike stresses that it’s not just for the wealthy: “Basically, anybody with any kind of money needs to think about this.”

One of the most significant changes in the last few decades has been the dramatic rise in property values, which has pushed many people into needing estate planning, even if they don’t consider themselves wealthy. With UK property prices having skyrocketed over the last 30 years, homeowners who never thought they’d be subject to inheritance tax are now finding their estates could be taxed at 40% upon their death.

Estate Planning for Property Investors

For property investors, particularly those owning multiple properties, estate planning becomes even more critical. Many investors hold their properties within limited companies, which can complicate matters further. Colin explains that while it’s common to create companies, “smart companies” with different share classes to manage dividends, capital, and voting rights separately, is the next level of wealth planning and integrating these structures into a trust is a powerful way to shield the value of the business from taxes and other threats.

Mike Pugh stresses the importance of starting the process early. “To get truly tax efficient can take seven years,” he notes, emphasizing the need for long-term planning.

Case Studies: Real-Life Applications

Mike walks through some real-life examples of how estate planning works in practice. One example involves a client with a £1.5 million estate, largely tied up in their primary residence. Through the use of trusts, Mike’s team was able to significantly reduce the estate’s exposure to inheritance tax, saving the family hundreds of thousands of pounds.

He also discusses larger cases, such as clients with multimillion-pound property portfolios, where advanced planning can mitigate significant capital gains and inheritance tax liabilities.

Don’t Leave It Too Late

A common theme throughout the interview is the importance of not waiting until it’s too late. Estate planning, especially when it involves complex assets like property or business holdings, takes time to set up and become effective. Mike advises people to start thinking about it early, ideally around the age of 50, when protecting wealth becomes as important as building it.

He also highlights that while estate planning may sound complex, working with the right professionals can simplify the process and lead to significant savings. “It’s always worth just going that one more crank of the wheel to see if there’s a better way to get to the solution,” he says.

Key Takeaways from the Interview with Mike Pugh:

1. Start Early: Estate planning can take years to be fully effective, so it’s crucial to begin the process as soon as possible.
2. Use Trusts to Protect Assets: Trusts are a powerful tool to protect your wealth from taxes, lawsuits, divorce, and other threats.
3. Work with Specialists: Estate planning is complex and requires the expertise of professionals who specialize in the field.
4. Don’t Assume You’re Exempt: Even if you don’t consider yourself wealthy, rising property values and changing tax laws could make estate planning essential.
5. Be Proactive, Not Reactive: The cost of doing nothing can be devastating to your financial legacy.

Conclusion

Estate planning might not be the most exciting topic, but it is essential for anyone who wants to protect their assets and pass on their wealth efficiently. Mike Pugh’s practical insights offer a roadmap for navigating the complexities of estate planning in the modern world. Whether you’re a property investor, a business owner, or simply someone looking to secure your family’s financial future, it’s never too early—or too late—to start planning.

To learn more, check out MP Estate Planning and watch the full podcast episode for an in-depth discussion on protecting your wealth.