Estate Planning Solutions
Efficient estate planning allows you to cover each and every base in the event that the worst happens. It allows you to state where your funds should go, your final arrangement, and more.
What is Estate Planning?
Estate planning is the process of preparing your affairs — how they will be preserved, managed, and distributed after you die. Your ‘estate’ refers to your total assets. This can include your home, bank accounts, pension, insurance policies, as well as other assets you own.
Proper estate planning ensures that your assets and money are all protected when you die and will go to any beneficiaries you see fit.
The most common reason for estate planning is to provide security for a spouse or children after you are gone, preserve wealth for future generations, to donate to charitable organisations, and more.
Efficient and early estate planning is ideal for giving peace of mind to your loved ones, letting them know exactly how you want your estate and affairs to be managed upon your death. A death in the family is a stressful time, the additional complication of working out what to do with their estate can multiply this stress tenfold.
The Benefits of Estate Planning
Planning the specifics of passing your estate on to your loved ones may be a difficult task. However, it is also a vital one with a number of important benefits for both you and your beneficiaries — benefits like the ability to better understand the value of your assets, being able to minimise the inheritance tax impact, and more.
The benefits of efficient estate planning include:
- Gain a more clear understanding of the current value of your estate. Allowing you to be more flexible with your life-choices should you wish.
- The choice to support family now instead of after you are gone, allowing you to see the positive impact that your help will have.
- Find out the sustainability of your assets and make sure you will have enough to give to your family, even if you live for several more years.
- Help break the taboo and discuss plans for your loved ones after you are gone.
- Minimise inheritance tax through proactive planning and preparation.
Estate planning is not reserved just for the richest. It is important that you plan ahead and begin the process of securing your assets early and ensure that your loved ones are cared for after you are gone.
How to Plan Your Estate
Planning your estate is essential to ensure that your life-earned assets are not lost amongst bureaucracy, estate taxations, and distant relatives coming out of the woodwork. It is essential that you understand the process, so you can set out your exact requirements and make sure your loved ones are taken care of after you are gone.</p> <p>The process of planning your estate is as follows:
Will or Trust?
The first step in the estate planning process is to establish exactly what form of plan you wish to enact. Sit down with a specialist to discuss the intricacies and unique aspects of your situation to determine exactly what options are best for you.
For some, a will and a trust can hold significant benefits, for others a trust may bear no major significant advantage.
Carefully Consider Your Wishes
It may seem backwards to think this way, particularly if you are estate planning early in life, but it is important to carefully consider each and every one of your wishes in case the worst should happen.
What wishes do you have for your personal health care if you are unable to make such decisions for yourself? Would the appointment of a dedicated power of attorney to assist with health/financial issues put your mind at significant ease?
Consider your options carefully to ensure maximum coverage and security, as well as maximum peace of mind.
Nominate
Arguably the most important step in the estate planning process. Think about who you wish to cover and protect in your plan. This is commonly reserved for close family: children, partners, siblings, etc. or even charitable organisations. These people are your beneficiaries and should be clearly listed in your plan.
It is possible to alter your estate plan to add or remove beneficiaries as you see fit.
Research Tax Issues
A factor of estate planning that many forget; inheritance tax can take a huge amount of the money you wish to leave behind before it ever gets to your loved ones.
An effective and early estate plan can ensure that you do all you can to limit the impact of inheritance tax on your assets and estate.
Cover Funeral Expenses
It may be a wise decision to set up provisions to pay all funeral expenses upon your death. You are able to set up a pot of funds that, upon your death, is to be utilised specifically to pay funeral expenses. This is good to stop your loved ones from having to pay what can be expensive fees.
Final Arrangements
Any wishes such as donating body parts/organs should be included in your estate plan — as should any requests you have for the disposal of your body, burial or cremation, location etc.
Why Everyone Needs an Estate Plan
The purpose of an estate plan is to ensure that your loved ones are all taken care of after you have passed, minimising unnecessary stresses and complications as much as possible. Failing to create a comprehensive estate plan detailing your exact wishes invites these issues onto your beneficiaries.
If you don’t create an estate plan, you potentially leave your entire estate to the court system. This method of distributing your assets won’t guarantee that your wishes are followed. Your assets will be distributed however the court-approved representative decides, and the financial impact of the inheritance process may be significantly higher.
Cons of not creating an estate plan are as follows:
- The courts are the ones making the key decisions over your assets
- You are unable to name an executor to oversee your estate
- Your preferred guardians if you have small children will not be automatically selected. The court would decide instead.
- Your beneficiaries are out of your hands
- Inheritance tax is a non-factor in the issuing of funds. All money will be distributed in one lump sum meaning that the full tax amount is likely to be in force.
When Should You Start Estate Planning?
The common advice for when to start considering estate planning would be as soon as you begin to accumulate assets of your own. This can include when you turn 18 and are in full responsibility over your own finances, healthcare, etc. However, this train of thought is actually relatively uncommon in practice. Very few young people of this age are thinking about what might happen after they die.
Therefore, while we do recommend starting estate planning as soon as possible, there are a variety of important life events that should act to make the call of comprehensive estate planning louder. These include property ownership, marriage, inheritance, divorce, and most importantly having a child.
Additionally, once your estate plan is in place, you can’t just step back and treat it as a job done. These milestones, from having a child to marriage, should also be treated as important reminders to update your plan.
Each time there is a life event that either increases your personal wealth, or impacts how you want your assets to be distributed upon your death you should seek to immediately alter your estate planning to reflect the change.
Estate Planning and Inheritance Tax: How Does it Work?
The standard rate of inheritance tax in the UK is 40% charged to the part of your estate above the £325,000 threshold.
If your estate is worth over this figure, it may be possible to significantly reduce the impact inheritance tax can have on the amount your beneficiaries receive. Methods include:
- Giving gifts while still alive
- Considering a trust. A trust is less impacted by inheritance tax than a will. Particularly if you put your life insurance/pension into it.
- Leaving everything to your partner. A spouse or civil partner in the UK is exempt from paying inheritance tax on anything you leave them.
- Making charitable donations
Contrary to popular belief, estate planning is not just setting out where and how your assets are to be passed on to your loved ones. It is also about getting a better idea of your financial situation, to help you to better enjoy life, safe in the knowledge that your loved ones are covered for.
Why Use Just Wills and Legal Services to Start Planning Your Estate
No matter when you do it, if you are planning your estate for whenever the day comes, you want to ensure you are dealing with somebody you know you can rely on. Here’s what makes us the best choice for you:
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