When Should You Start Estate Planning?
The question of when you should start estate planning is one that is considered by nearly everybody at some point in their life. Often, somebody will reach a certain milestone in their life and suddenly panic as to what will happen to their assets, to their loved ones, should they do.
This blog will cover this question and much more, including:
- What is estate planning in the UK
- Why do I need an estate plan
- Can I do my own estate planning
- How our estate planning service can help you
What is Estate Planning in the UK?
Estate planning is the act of preparing a clear plan covering the time-period surrounding somebody’s death. It includes the process of transferring assets to loved ones and other beneficiaries, determining guardians for any minor children, protecting against inheritance tax, and making arrangements regarding the funeral.
Traditionally, your estate plan would include the following measures:
- Write a will: The first step in estate planning is to create a will of your own and name all executors. At this point you may also consider making a trust or appointing a power of attorney.
- Count assets: A vital step in estate planning is to make a clear and comprehensive list of all assets and debts in your estate. This list typically includes property, assets, money, savings, investments, etc. that you want to leave behind.
- Minimise tax liability: Prepare for any measures you wish to make that can protect your beneficiaries from inheritance tax. This can include cash gifts.
- Funeral plans: Make vital provisions for funeral plans and expenses. This phase should include your final wishes so that your loved ones can make arrangements accordingly.
For more information on what is estate planning in the UK, check out our blog covering five estate planning facts you should know.
Why Do I Need an Estate Plan?
You need an estate plan to ensure that your final wishes are clear to your loved ones and that arrangements can be made in accordance. Other prominent reasons many people decide that they need an estate plan include protecting loved ones, ensuring care for minor children, limiting tax liability, and minimising familial arguments.
Ultimately, without an estate plan of any kind in place, should you die, the future of your entire estate will be decided based solely on the laws of intestacy — a series of guidelines in place to determine and make clear exactly what happens if you die without making a will. Estate planning guarantees that no matter what, your final wishes are followed.
The main reasons why you need an estate plan include:
Protect Loved Ones
In a world of rising costs and bills, many people see it is important that they protect loved ones however possible where they can. Creating a thorough estate plan can ensure that your family and should you wish, even close friends, are provided for in some way.
Whether it’s a small amount of money, a treasured item, or even the family home, the main component of an estate plan is the designation of assets to beneficiaries.
Ensure Care for Young Children
No parent wants to think about what will happen to children if they die, about leaving their loved ones alone. But if you’re the parent of a minor child, part of your responsibility as a parent is to prepare for such an unimaginable possibility.
In the will part of your estate plan you can ensure that your children are taken care of no matter what happens by naming guardians. A guardian is somebody appointed by parents who will be entrusted with the care of their children should they be unable. A guardian will then be responsible for the care of the children in question until they turn 18.
Without an estate plan that states this, the courts are forced to decide who will raise your children — a nightmare situation for any parent.
Minimise Family Dispute
When a family member dies, particularly a wealthy family member, it is unfortunately not uncommon for relatives to come out of the woodwork expecting money, for people to be upset about their share and comparing it to other relatives, etc.
Before you know it, petty squabbles between family over an inheritance can end in large scale divides and rifts lasting years. And if left unresolved, such disputes could even lead to court.
Limit Tax Liability
The core purpose of an estate plan is to protect your loved ones from anything, this includes protection against HMRC and inheritance tax. Proper planning and preparation can mean that your loved ones are able to pay the least amount possible, ensuring that your estate and your legacy can go further. Methods of minimising inheritance tax include:
- Giving gifts: Gifts given seven years or more prior to death are completely free from inheritance tax
- Trusts: Putting your assets into a trust can protect them from taxation.
- Will: Proper will writing can limit tax as spouses will not be required to inheritance tax.
When Should You Begin Your Estate Plan?
There’s a common misconception that estate planning is reserved exclusively for the rich. However, the reality is that estate planning is for everybody. An expert would suggest that the point when you should start estate planning is as soon as you are legally able to at once you turn 18 and can afford to buy assets of your own.
Once you create an estate plan, it is important that you also update it every three to five years. It is also recommended that you update your plan whenever you reach a certain milestone in life. These milestones include purchasing your own home, getting married, having a child, inheriting sums of money, and getting divorced. For more information on what milestones to update your estate, contact a legal professional.
Can I Do My Own Estate Planning?
Some people see the price of hiring a legal professional and baulk, thinking that they can do it themselves. While technically you can do your own estate planning, it is however not recommended — when it comes to something as important as protecting loved ones and leaving a legacy, you want to ensure that everything is done properly and without errors.
However, if you truly can’t afford the additional security that comes with an estate plan written up by a professional, there are options available to you such as DIY will services. These options are much cheaper and can be significantly faster. This can be useful if somebody is seriously ill and at risk of dying imminently.
How Our Estate Planning Service can Help
Ensuring that you have an estate plan in place at the earliest possible opportunity ensures that yourself, your assets, your loved ones, and your legacy are protected against any eventuality should the worst come to happen.
Creating a valid, detailed estate plan prior to your death will guarantee not only that your estate is in good hands, but that your wishes and best interests are considered at each juncture also.
Dying without any estate planning will likely lead to your assets being dictated based on the laws of intestacy, which can often results in your estate not being passed to the people you might have wished, your children being put into the care of somebody you may have deemed unsuitable, and decisions made on your behalf that you would not have considered appropriate.
Estate planning is the most effective way for you to guarantee total peace of mind, safe in the knowledge that no matter what happens, all of your affairs are totally in order and the risk of dispute and argument is minimised as much as possible.
The Just Wills and Legal Services team know that your death is unlikely to be something you would want to dwell on – however it is vital that you get it sorted at the earliest possible juncture.
Our team of experts have decades of experience when it comes to supporting people with their estate planning. We know what it takes to create a foolproof and conclusive estate plan, including writing a will, appointing a power of attorney, and creating a trust; all while considering minimising investment taxes.
Get in touch with a member of our dedicated team to find out more about what we can do for you, what it takes to create a thorough estate plan, and more.
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