Estate Planning Essentials: A guide for Families

Estate planning is one of the most effective ways you can protect your family and ensure that your assets are managed as you wish. Whilst many people assume that estate planning is something that should be considered later in life or for those with significant wealth, anybody with a property, savings or dependants should consider having a plan in place.

Estate planning isn’t just about passing on wealth, it concentrates on protecting your family, following your wishes and ensuring that things are looked after by people that you trust.

The checklist below outlines some key factors involved in creating a plan and the different aspects which you should consider.

Estate Planning Checklist

• Create or Review your Will

Your Will makes up a major part of your estate plan. Having a Will in place allows you to decide who will manage your estate when you pass away, names guardians to look after minor children and provides specific instructions as to who your assets should pass to.

It is important that you review your Will regularly to ensure it meets your needs. It should also be reviewed whenever there are any substantial changes in your life such as moving in with someone, getting married, having a child/grandchildren or even as your assets change over time.

• Consider Inheritance Tax Planning

In England and Wales, individuals can pass on a certain amount of their estate free from Inheritance Tax (IHT). This is known as the Nil Rate Band, which is currently £325,000.

There are different allowances and exemptions that apply based on your own personal circumstances and how you choose to leave your estate.

It is important that you consider your IHT position and seek advice from a professional as there may be areas that you could consider to reduce any potential tax bill, such as; using tax free allowances, property ownership arrangements, Business Property Reliefs and making gifts during your lifetime.

Early planning can help to reduce the potential tax bill, to allow more of your assets to pass to your chosen beneficiaries.

• Protect vulnerable beneficiaries

If you are going to be leaving assets to a person who may require support in managing their own finances, it is important that you consider how receiving an inheritance may effect them and how this would work in practice.

There are a number of different options which are available in order to support these particular situations such as having trust in place (which can be included within your Will) to ensure these monies are managed efficiently.

• Review property ownership

The way in which a property is owned has an effect on how it passes on your death.

For a jointly owned property, there are two different ways in which a property can be owned: –

Beneficial Joint Tenants – this basically means that you own 100% of the property with the joint owner. If one of the joint owners pass away, the other one automatically inherits the property, regardless of what any Will states.

Tenants in Common – this means that each owner has their own individual share of the property which would then pass in accordance with their own Will (or intestacy rules if they don’t have a Will).

• Protecting your assets for the future

Many people want to protect the assets to ensure that they are passed on to their chosen beneficiaries.

Some common concerns in estate planning are the potential impact of second marriages and blended families and also an individual requiring care.

When a person requires care, their financial circumstances are usually assessed to determine whether you would be expected to contribute towards the cost of care. Whilst there is no guaranteed way to avoid paying for care, careful planning and help to understand options can help to protect your assets against care fees. It is important to seek professional advice as deliberately depriving yourself of an asset to avoid paying for care can have serious consequences.

Second marriages can also cause concerns and challenges, particularly where children from previous relationships are involved. Without planning, assets may not pass to intended beneficiaries. If, for example, assets are left outright to the surviving spouse on the first death, then on subsequent death the assets would all pass in accordance with their Will or Intestacy Rules. This means that if you had children from a previous relationship and your spouse’s Will did not make provision for them, then your children would not inherit anything.

A carefully structured Will can be made to help balance the needs of the surviving spouse whilst ensuring that your assets ultimately pass to your chosen beneficiaries.

Whilst everybody’s personal circumstances are different, estate planning can help to protect your assets for your chosen beneficiaries and reduce the risk of any unintended outcomes.

• Organise Financial Information

When you pass away, your Executors need information relating to any assets that you hold including what the asset is, who the asset holder is, any account numbers and values and also any debt information including property utility bills etc.

It is therefore worth having a secure record of all of your assets and debt in one place to make this easier for your Executors to deal with.

• Review asset Beneficiary Nominations

There are some assets that do not pass in accordance with your Will and you can usually nominate a beneficiary on these assets, directly with the assets holder, that you wish for them to pass to.

These usually include: –

• Life Insurance policies
• Pensions
• Death – In – Service benefits

It is important that you review your beneficiary nominates regularly to ensure that these assets pass in accordance with your wishes.

• Put Lasting Powers of Attorney in place

Estate planning isn’t just looking at what will happen to your assets when you pass away but also what might happen if you are no longer able to manage your affairs.

A Lasting Power of Attorney (LPA) allows you to appoint people (attorneys) who you trust to make decisions and manage your affairs on your behalf if you were no longer able to do this yourself.

There are two different types of LPA:

Property and Financial Affairs

This LPA covers anything relating to money and property. This document would allow your attorneys to manage your bank accounts, investments, household bills and your property.

Health and Welfare

This LPA covers matters relating to your personal welfare and would allow attorneys to make decisions regarding any medical treatment you may receive, care arrangements and manage your daily welfare needs.

If you do not have LPA in place and you lost mental capacity, your family would have to apply to the Court of Protection to gain authority to act on your behalf. This is a very lengthy process that also takes away your decision as to who you would wish to act on your behalf in dealing with these matters.

How can Taylor Bracewell’s Wills, Probate & Trusts team help?

By working through this checklist and ensuring that you review your arrangements regularly in line with your personal circumstances and wishes, you can help to ensure that all of your wishes will be met, and provide peace of mind for you and your family that you have planned for the future. 

If you require any further information on any of the topics covered in this checklist, or should you require any assistance with your own Estate Planning, then please do not hesitate to contact our Wills and Probate solicitors on 01302 341414, alternatively, you can fill out our online enquiry form.