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    You and yours estate planning

    • YOUR IN-DEPTH FINANCIAL TOPIC GUIDE

      Estate planning – too important to put on hold

      All too often, people put off estate planning. This is understandable as, rather than preparing for the here and now, it requires you to consider what will happen when your life is over, hardly something most of us rush to contemplate.

      Consequently, estate planning often becomes, and all too often remains, a do-it-tomorrow task. When it could suddenly become all-important it might be too late. After all, accidents and sudden illnesses – such as Covid-19 – can and do happen.

      This guide will help you prepare effective plans that will help ensure you control what happens to your estate.

      Download our guide

    Why is estate planning important?

    An estate plan lets you maintain control of your assets and clearly sets out your wishes when the time comes that you are no longer able to look after them. Personal estate planning is important because it allows you to:

    • Avoid Intestacy

      Your estate is considered to be “intestate” if you have not made a valid will, which is a Latin term that means “without a testament” so your estate is dealt with according to legal default. This means your wishes may not be carried out, so it makes sense to have certainty.

    • Peace of mind

      Get peace of mind knowing your affairs are in order. This can also reduce confusion for your chosen Executor. Read more in our Probate guide.

    • Create your estate plan alongside other financial planning

      To do well you will need money to live on comfortably and provide an income for later life. Not only looking after your beneficiaries.

    • Don’t pay more tax than necessary

      Calculating your Inheritance tax ahead of time, allowing you to use estate planning tools (such as Wills, Powers of Attorney, gifting and Trusts) to pass on your estate tax-efficiently.

    Benefits of estate planning

    By arranging your estate planning ahead of time, you can set out your wishes and ensure your Executor has clear instructions to follow.

    • You decide on the choice of beneficiaries If you do not set out in a Will whom you wish to benefit from your estate, then the State will do it for you under intestacy rules in respect of any assets that you don’t own jointly as joint tenants. The results are not always what you would expect and can create unnecessary tax liabilities.
    • You decide what goes to whom You might want to leave a particular item to a particular person. Without estate planning, those wishes may not become reality.
    • You decide the structure Leave it to the State to distribute your wealth and normally anyone aged 18 or over will receive their inheritance outright. In some families, that will not be an issue, but in others placing some constraints on how an inheritance is handled could be essential.

    With estate planning in place, you will have addressed these important issues rather than leaving them on permanent hold. However, like all other aspects of financial planning, your estate planning will need regular review.

    How to plan your estate

    Your estate planning will need to take into account your assets, but also your unique circumstances – if you have a young family or own your own business for example. Our estate planning guide is not financial advice and cannot take all scenarios into account. Talking about your later life can also be emotional – which is not always conducive to smart decision-making. This is why we would recommend speaking to a Wren Sterling financial adviser who can be unbiased throughout this process, explain any regulatory changes, and help you make informed, confident financial decisions.

    • Make a Will

      A Will is the cornerstone of your estate planning. In it you will need to assign an Executor who will carry out your wishes. If you want help with this important document, Wren Sterling has an arrangement with third parties, giving you discounted Wills, so please speak to your adviser.

    • Consider a Power of Attorney

      A Lasting Power of Attorney allows someone you trust to make decisions about your health and finances on your behalf, if you’re unable to.

    • Calculate your Inheritance Tax

      Calculate the value of your estate and find out if you’re likely to pay inheritance tax. With threshold freezes, more people are likely to be liable, so it’s important to plan ahead so you don’t pay more IHT than you need to.

    • Allocate funds for your care

      When considering your legacy, you also need to think about your income in later life and how you will pay for care if you need it. There are consequences for trying to avoid paying for care known as ‘deprivation of assets’.

    • Consider specialist services

      You can do your estate planning yourself, but if you have complex needs you may need input from a Lawyer, Tax Specialist, Accountant or Mortgage adviser to ensure your estate plan is carried out as you wish.

    • Talk to your family

      Your legacy can be an emotional topic for you and your loved ones. We find including family members in discussions about your financial situation can give them peace of mind about the future.

    Estate planning may be easier than you think. Get started today with our six point plan to peace of mind. Read more in our article 6 steps to your Estate planning

    What documents do you need when planning your estate?

    Will

    You Will is the only way to avoid Intestacy rules that would distribute your estate according to the State rather than your wishes (apart from any assets owned jointly as joint tenants, which pass automatically to the surviving owner). When writing your Will, we would recommending learning about the Probate process and your Executor’s duties to ensure you leave adequate instructions.

     

    Trust

    Trusts can be used to pass assets down to future generations, and even protect assets against divorce, bankruptcy or manage assets on behalf of vulnerable beneficiaries.

     

    Power of Attorney

    Power of Attorney does not overlap with your Will, as this concerns what you would like to happen during your lifetime if you lose capacity to handle your affairs. Consider who you would want to support you with different needs as there are different types that cover your finances and property or your health and welfare.

    How do I start the estate planning process?

    It’s never too early to start making plans to safeguard your legacy. With a comprehensive estate plan you can make your wishes known and make decisions that can support your beneficiaries? when you’re gone. The first step is to make a list of all your assets and liabilities. Because individual estates can vary, this will be different for everyone. From here, you can calculate your Inheritance tax liability, and how you would like to distribute your assets. When thinking about your estate planning, we would recommend talking to your Financial Adviser who can give you impartial advice on how to structure your estate.

    What assets can be included in an estate plan?

    Your estate plan needs to include anything you own that is of monetary value. This includes:

    • Your main residence and any additional properties or land.
    • Money in bank accounts, ISAs and stocks and shares
    • Household items
    • Foreign assets
    • Money that you’re owed (for example, salary or refunds from household bills)
    • Vehicles (including cars, boats and caravans)
    • Payments triggered by death, such as a Life Insurance policy or a Lump Sum Death Benefit from a pension
    • “Digital” assets such as family photos, social media profiles and music collections, which can be treated as treasured possessions
    • From 2027 any unused pension funds will also be included in inheritance tax calculations.

     

    • Estate planning for Business Owners

      Business Owners have an additional legacy to pass on – and should plan ahead in case illness or injury prevents them from taking an active part in handing on their business.

      If you are a Business Owner, our Workplace team can help you create a succession plan, taking into account your personal and professional priorities, and considering how different scenarios will affect the smooth running of your business, as well as your beneficiaries, Shareholders, Directors etc.

    This information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from taxation, are subject to change.

    The Financial Conduct Authority does not regulate inheritance tax planning, trust advice and will writing.