What is estate planning?
Estate planning is the process of deciding how your assets and affairs will be handled after your death or if you become incapacitated. Your assets include everything you own, like your:
house
car
bank accounts
investments
life insurance
personal belongings
digital assets
Your affairs include your:
health care
finances
legal matters
personal requests
There’s no reason not to have an estate plan in place
Anyone who has something or someone they care about should have an estate plan, no matter what their age, income, or health status. Estate planning can help you:
Provide for your family or other beneficiaries: If you don’t have a will in place, your estate will be distributed according to the rules of intestacy rather than your wishes. You can find out who will inherit your estate should you die intestate on the Gov UK website.
Appoint guardians for your children: Without instructions on who you would like to care for your children if you die, the courts will decide who they will live with. They may even be taken into care temporarily while the decision is made, which is the last thing you’ll want them to go through at such a traumatic time.
Keep the tax you pay to a minimum: According to the Guardian, inheritance tax is Britain’s most hated tax. If you plan effectively, using tools such as trusts, gifts and your pension, you can reduce your inheritance tax bill and ensure more of your hard-earned money goes to the ones you love rather than the government.
Ensure there are no delays in transferring your assets: Imagine the people you love having to deal with finance-related stress at the same time as dealing with losing you. They can’t pay the mortgage because your money can’t be accessed until the rules of intestacy have been applied to your estate, or someone is contesting what they should inherit. By setting out your wishes clearly in a will, your assets can be distributed without delay, lessening the burden on your loved ones.
Avoid family conflicts about the distribution of your estate: By creating an estate plan, then openly discussing your wishes with your family and explaining what will happen to your estate when you die, you can avoid long delays in the distribution of your assets and unnecessary emotional distress for those involved. Everyone will be clear on what you want and there will be no surprises, which reduces the chance of arguments or falling out when emotions are already high.
Be clear on your wishes for your end-of-life care and funeral arrangements: You can avoid stress and disagreements between your loved ones by setting out what you want to happen when you die. They won’t have to worry about making difficult decisions with doctors without knowing the care you want at the end of your life, and will feel less stressed as they’re not having to make decisions without guidance – you'll be helping them even after you die.
What are the main elements of an estate plan?
An estate plan usually consists of several legal documents that carry out your wishes should you become incapacitated or die. Your plan can include:
A will that states who will inherit your assets, who you want to be the executor of your estate, and your choice of guardian for your minor or dependent children.
A trust, which is a legal entity that holds and manages your assets for the benefit of your beneficiaries. A trust can help you avoid probate, reduce taxes, and provide more control and protection over your assets.
A financial power of attorney that authorises someone to act on your behalf in financial and legal matters, such as paying bills, managing accounts, or signing contracts.
A power of attorney for health that appoints someone to make medical decisions for you if you are unable to do so yourself.
A living will that expresses your preferences for your end-of-life care, such as whether you want to receive life-sustaining treatments, organ donation, or palliative care.
A beneficiary designation that specifies who will receive your assets after you pass away.
A letter of instruction that provides additional information and guidance to your executor, beneficiaries, or caregivers, such as where to find important documents, how to access your digital assets, or what to do with your personal belongings. You can use Leighan’s List to record all this important information.
How do you create an estate plan?
Creating an estate plan can seem overwhelming and not a priority when we’ve got busy lives, but it's worth investing some time in to help your loved ones in the future. Here are some steps you can take to get started:
Take an inventory of your assets and debts, including an estimate their value.
Decide who you want to inherit your assets, and how you want to distribute them.
Choose who you want to be your executor, trustee, guardian, and power of attorney.
Consult a financial advisor or solicitor who specialises in estate planning, who can help you draft and execute the legal documents that suit your needs and complies with the relevant laws.
You’ll need to review and update your estate plan regularly, especially when there are changes in your life, such as getting married, divorced, having a baby, or moving house.
Why is estate planning important?
Estate planning can help you protect your loved ones and your legacy. By having an estate plan, you can:
Ensure that your assets are distributed according to your wishes, and not by the courts and laws of intestacy.
Minimise any stress, costs, and delays for your family and beneficiaries.
Prevent or resolve potential disputes or challenges to your estate.
Reduce the taxes and fees that may affect your estate.
Provide for the special needs or circumstances of your beneficiaries, such as minors, dependents, or disabled individuals.
Give yourself and your family peace of mind, knowing that you have planned ahead.
Estate planning is an ongoing process that ensures your wishes are respected and what you own goes to the people you want it to. Leighan’s List is a free resource that helps you gather the information you need to put your plan in place. It makes an executor’s job more straightforward at a time when they are likely to be emotionally vulnerable. Look around our website for more information and to start your estate planning journey
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