5 Things to Consider for Successful Estate Planning

Many people are unsure what to consider when it comes to estate planning. The more you plan now, the better things will be for you and your loved ones in the future. There are many elements that make up your estate, so we have provided a handy 5-point checklist to ensure you have everything covered:

1. What’s your estate worth?

The term ‘estate’ covers your property, wealth, and any ‘assets’, such as valuable items and possessions, as well as any business interests. When it comes to property, don’t forget any buy-to-let or overseas investment property you may own – see our previous blog, Our Guide to Trusts and Estate Planning. It’s really important that you get an accurate estate valuation, as you will need this for your Will.

2. Have you got a Will?

We have written various articles on Wills – see our recent blog, 7 Common Mistakes When Writing a Will – as this is such a major part of your estate planning, we placed it second on the list. Without a Will, your wishes may not be fully respected when you pass away, so it’s absolutely vital that you create a Will. When you look at your Will, you will need to consider the total value of your estate. If you already have a Will, then schedule some time in your diary to review this on an annual basis in case things have changed – for example, your family has grown, you have more grandchildren, or perhaps you have moved into a bigger home. If you have remarried and you have children from both current and previous relationships, it is absolutely vital that you update your will. Otherwise, some of your children may face disinheritance issues due to the rules around inheriting from married partners – see our recent blog on disinheritance.

3. Have you considered setting up a Trust?

Put simply, a Trust is a legal arrangement where one or more people (or a company) are considered “Trustees” and control the money or assets from an estate, which they must use for the benefit of the “Beneficiaries”. There are lots of reasons why people set up trusts, which include protection against Inheritance Tax, care home fees, and debts but, ultimately, a Trust ensures your assets are passed to the people you choose. It’s well worth considering whether a Trust could provide vital benefits for your estate planning and personal circumstances. The different types of trust include Asset Protection Trusts or Lifetime Trusts, a Family Protection Trust and a Property Protection Trust – all have different features and offer various benefits depending on your situation, so always speak to a professional financial planner before you choose a Trust.

4. How much Inheritance Tax will be owed?

Inheritance Tax (IHT) is one of the biggest concerns when it comes to estate planning. This is charged at 40% if your estate value exceeds the current threshold –£325,000 for tax year 2018 – 2019. However, there is a new allowance that allows you to give away your home to your children, and the relating threshold is £450,000. And, if you’re married (or in a civil partnership) and your estate is worth less than your threshold, any unused threshold can be added to your partner’s threshold when you die, which means your threshold could increase to £900,000.

5. Did you know you can gift to loved ones?

You may or may not be aware that in some situations, gifts can be given to loved ones, and in the event of your death, such gifts may be exempt from Inheritance Tax. This can be a complex area, so we would always advise checking the current rules on this area of estate planning. The latest government guidance states that you can give away gifts to the value of £3,000 per tax year (this is your ‘annual exemption’):

A gift can be:

  • anything that has a value, such as money, property, possessions
  • a loss in value when something’s transferred, for example if you sell your house to your child for less than it’s worth, the difference in value counts as a gift

Source: Gov.uk/inheritance-tax/gifts

For more information on Trusts, Estate Planning, Wills and Inheritance, please refer to our previous blogs or visit our Inheritance page.

If you would like help with your Estate Planning, please get in touch to speak to one of our financial planners. We will carry out financial reviews and advise you on suitable financial planning.