7 steps to pass on a portfolio

Important information - the value of investments and the income from them can go down as well as up, so you may get back less than you invest.

Each situation comes with its own challenges. Regardless of who you plan to leave your estate to, however, a few basic steps can ward off problems down the line.

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1. Make a list

It is easy to accumulate lots of bank accounts, ISAs, pensions and insurance policies over time. And nowadays, there is often no paper trail.

“Think about compiling them in one document or a spreadsheet, and making sure your family knows where it is,” says Alice Guy, an independent pension expert and chartered accountant. “For probate, they will need to find everything. Having it all in one place could speed up the process and make it a bit less stressful.”

Obtaining a grant of probate is not the only hurdle. When you die, your loved ones may have to submit a tax return on your behalf. This is nigh on impossible if your finances are a black box.

Start by making a list of the assets you have, which provider they are with, and roughly how much they are worth. Beware of listing passwords, however. When someone dies, executors of the will should not use passwords or PINs to access their online accounts. In fact, they could run into legal trouble if they do so. Instead, they need to go directly to the companies to gain access. 

By categorising your investments, your beneficiaries are less likely to miss out on money that’s rightfully theirs. This is a big problem. The UK is home to a staggering £50bn of ‘dormant’ assets, according to reports from 2022, consisting of everything from pensions to premium bonds².

2. Keep things simple

If step one proves very arduous, it might be the moment for a spring clean.

 “During a very difficult time for a bereaved survivor, there is some comfort in dealing with an estate that is administratively simple,” says Lisa Whiting from Fidelity’s wealth management team.

If you have lots of paper share certificates you may want to digitise them, for example. Most of the big investment platforms will allow you to do this, and it typically involves filling in a Certificateless Registry for Electronic Share Transfer (CREST) form.

You may also want to consolidate your pensions, close old bank accounts, and deal with particularly fiddly things like foreign assets. If you have very small amounts invested in certain funds or shares, it might also be time to cut them loose.

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3. Make a will - and don’t forget your pension!

When it comes to estate planning, making a will is the single most important thing you can do. And yet, 53% of adults aged between 50 and 64 do not have one³.

Efforts are being made to address this. ‘Free Wills Month’ is a UK-wide campaign, where charities partner with solicitors to offer over 55s the chance to have a simple will written or updated for free. It is due to kick off again in October.

Paying for tailored support is often sensible, however. “Sometimes people get into a frugality mindset, and they are too cautious to pay for advice,” says Alice Guy.

Once you have made a will, there are a couple of other documents to attend to. Pensions are not usually covered by your will. Instead, you have to fill in an ‘Expression of Wish Form’ to tell the scheme provider who you would like to inherit your savings. They will usually follow your wishes, but they are not legally bound by them.

“You could get a scenario where someone has got divorced but still has their ex-wife as the beneficiary of their pension because they hadn’t updated it,” says Guy. “The pension company would then have to make a decision.”

Last but not least: sort out a lasting power of attorney (LPA). An LPA is a legal document that lets you appoint people to make decisions on your behalf, if you lose mental capacity. This is clearly a major decision, and many people instruct a solicitor to help.

Find out more about the types of Power of Attorney

4. Talk

So far, there has been a lot of paperwork. Talking is a key part of passing on a portfolio, however.

‘‘It’s about being transparent,’ says Jack Cornell, a relationship manager at Fidelity. ‘I think, as a country, we’re not particularly good at that. But you need to think about the people who will inherit the money, and what their objectives are. It’s not nice to have morbid conversations - but it’s prudent to have a plan in place.’

For couples, there is often one person who handles the finances and another who is less involved. This can cause issues if the savvy investor dies first. It’s useful, therefore, to have conversations well in advance.

The first thing to cover is the current state of the household finances - your list will come in handy here. Once that’s ticked off, however, you can look to the future. Would your partner prefer risky or less risky investments? Do they want to manage an extensive portfolio? And what do they actually want to do with the money? Research suggests that women are more likely to want to pass on wealth in their lifetime than men, for example⁴.

Getting children involved can also be helpful. ‘There’s real value in taking an intergenerational approach, says Robin Melley, managing director of Matrix Capital Financial Planning.

“We’ve had some really fabulous outcomes where we’ve managed to persuade mum and dad - who came for advice - to involve their children.”

5. Review your investments

These conversations lead neatly onto step five: review your investment approach.

For starters, do you want to stay invested in the first place?

“The first thing we always ask when a client is health-compromised or elderly is: is it feasible for them to remain invested?” says Lisa Whiting. “If markets crash tomorrow, they may not have the longevity to ride out the recovery. It’s a case of thinking whether there is merit in derisking the portfolio, or indeed encashing it.

There are some important tax implications here. The first thing to note is that capital gains tax is extinguished upon death. You don’t necessarily want to encash everything, therefore, and create a huge CGT liability during your lifetime. If the money is unspent, it could also be subject to inheritance tax (IHT) on death.

That said, you may need to free up some cash to sustain your lifestyle, or to pay for care down the line. “It’s often a balance between preserving capital and ensuring good liquidity,” says Melley. “There’s sometimes an inherent conflict between making sure you don’t run out of money in later life and passing on as much of your wealth as possible.”

Assuming you’re happy to stay invested, now might be a good moment to re-evaluate your portfolio. If your partner is not keen on DIY investing, you could trim your exposure to individual stocks and active funds and opt for a range of passive funds instead.

Alternatively, multi-asset funds such as the Vanguard LifeStrategy range may appeal. These funds offer ‘ready-made’ portfolios, consisting of a mixture of equities and bonds.

There is also a question of how many investments are too many. At Fidelity, customers with portfolios of between £100,000 and £200,000 have an average of eight fund holdings. Those with larger portfolios don’t keep buying more and more, however, with the number plateauing at roughly 17 for clients with between £500,000 and £800,000.

6. Think about who owns what 

For couples intending to pass assets to each other, joint ownership is also something to consider. This is because it will ensure accounts pass immediately to the survivor, without the need for a lengthy probate process.

“That can be convenient,” says Robin Melley. “But you have to take a holistic approach and consider other factors like inheritance tax planning. Owning assets jointly does simplify matters, but sometimes that simplification can unwind some of the planning.”

7. Swot up on ISA rules

ISAs cannot be held jointly. It is possible to pass an Isa to your spouse or civil partner, however, and keep the tax benefits. This is due to something called the “additional permitted subscription” (APS) allowance.

Regardless of who the contents of the Isa have been left to, your partner will inherit this allowance from you. This sits on top of the usual £20,000 limit and is the value of the Isa on the day someone dies or when the account closes (whichever is higher).

This is just one tax consideration. There are many, many more. IHT casts the longest shadow and is notoriously knotty. As a result, it requires a different, rather more complicated, checklist.

• Read our ISA FAQs to help you understand how ISAs work

For now, though, it’s time to think of something nicer - like what to do with that big lump of cash.

This article was originally published in Investors' Chronicle.

Source:

¹ EY.com. 20.05.25
² FT. 21.07.25
³ MaPS. 27.01.25
⁴ Schroders. 08.03.23

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