What Is Estate Planning? The Definitive Guide To Passing On Your Assets

Nobody likes to dwell on what will happen when they’re gone but equally we all want the peace of mind that our estate is in good order when we do.

By good order, we mean ensuring the correct documents are in place, such as Wills, Legacies and Trusts and Lasting Powers of Attorney (LPA).

Estate planning is the process of getting all your affairs in order and protecting and preserving your assets. It also includes any business interests as part of succession planning and ensuring that any Inheritance Tax (IHT) liability is kept to a minimum.

Most people don’t pay much attention to organising their estate until it’s too late to implement some of the key elements, such as IHT planning and Lasting Powers of Attorney, the latter of which can only be set up while you still have your mental faculties.

It’s essential to make preparations in good time to ensure your wishes are carried out when you die and your assets are kept within your family and are not swallowed up by the taxman or lost to divorce or bankruptcy.

Here’s a checklist of things you need to do to get your affairs in order:


Write A Will

If you don’t, the State will distribute your estate in accordance with the laws of intestacy. This may not be in accordance with your wishes.

Writing a Will gives you the control to distribute your estate to whoever you choose.

You can also use a Will to establish the sort of funeral you’d like and choose guardians for your children if you die while they’re still young.

Once you’ve written your Will, keep it up to date. Your circumstances are likely to change over the years and the contents Will need to reflect this.

It’s important to let your family and your executors (who may be one and the same) know where your will is kept.

You also need to remember that getting married or entering into a civil partnership will, in almost every case, automatically invalidate your existing Will.


Set Up A Lasting Power Of Attorney

You can use Lasting Powers of Attorney (LPAs) to select trusted friends or family to make decisions about your finances and/or medical treatment if you become too ill to make them yourself.

This can be reassuring to you and your family as it will help them deal with financial institutions, such as banks and building societies. Without a LPA there could be a long delay before they can access your assets.


Establish A Trust

Trusts are legal documents that enable you to protect your estate while also reducing any IHT you may have to pay. They can be stand-alone documents or incorporated into wills.

Estate planners use trusts extensively in what’s known as ‘bloodline planning’, i.e. ensuring your assets stay within the family and are preserved for future generations.

They are not a one size fits all solution and which trust, or combination of trusts, will suit your needs can be established as part of the planning process.


Keep A List Of Your Assets

Keep an up-to-date note of all your assets and all your debts. This will help the executors of your will when the time comes.

If you’ve made any gifts in the last seven years outside of the normal IHT allowances you’ll need to keep a note of them. This will be used to determine how much IHT is due under the taper relief rules.

Likewise, if you’ve made any regular gifts out of income – allowable under IHT rules as a way of mitigating your liability – you’ll need to document them.

Read more about how to mitigate against Inheritance Tax.


Ensuring that your estate is organised not only gives you peace of mind but it will also make it a lot easier for you family to handle your affairs when you’re gone, at what will be a difficult time for them.

It will also help avoid any financial difficulties for them as they’ll be able to secure a Grant of Probate and access the funds and assets in your estate much quicker if all the documents are in order.


Get in touch

Family Estate Planning can help with all aspects of estate planning in Wokingham, Berkshire, Reading, Surrey, Hampshire and across the South East.

For an informal, no obligation chat about your circumstances please email andy@familyestateplanning.co.uk or call 0118 974 0134.