New partner? Time for a financial review

Congratulations to those new and recent partners who are taking part in the next round of the Law Society of Scotland’s Practice Management Course.

Participating in the success of your firm can be a daunting prospect. Also, given it is the recognition by your peers that you are ready to step up, it’s natural that making it work is going to be the priority. With increased responsibility to the firm you may forget about yourself, and the needs of your family.

As an employee of your firm you would have been entitled to certain benefits, such as death in service, private medical insurance, income protection and an employer-funded pension. As a self-employed salaried or equity partner the provision of these benefits will now be your responsibility. It is important to focus on the decisions that you need to take both now and throughout your career as you transition from employment
to self-employment.

We recommend you:

• look at what insurance policies and pension plans will be in place once you become partner;
• establish what is needed to help protect yourself and your family;
• carry out a financial planning exercise to calculate your future net income;
• establish whether your new income reduces your entitlement to child benefit;
• put in place suitable plans that protect you and your family;
• save surplus income tax-efficiently.

You should discuss your transition to partner with your HR department, as you may be entitled to join certain schemes within the firm that are available as part of your partnership agreement.

It is also important to speak with a trusted financial planner who can review your personal circumstances and establish what you and your family need. Following this, it will be possible to understand if your existing arrangements are suitable, consider implementing additional arrangements that can provide for you and your family, and look at tax-efficient savings plans
to support your medium to long term financial needs.

Importantly, make time for yourself now and take advice.