What exactly is estate planning?
Estate planning is the process of arranging your affairs in order for you to pass your assets on to your selected beneficiaries: usually your children and grandchildren. Ideally, it should incorporate plans to reduce or eliminate any potential inheritance tax payable.
The methods used should also ensure that assets left to children are not lost to the family due to future events such as divorce or becoming bankrupt. If you are in the millionaire asset group and haven’t already done so, you should strongly consider estate planning.
What is involved in estate planning?
There are three stages.
- The first and most simple stage. You should ensure that a correct Will is made out, ideally by the same lawyers that draw up any trusts
- You should put plans in place so that your assets pass to a trust, or better still, a number of trusts. These should be set-up during your lifetime, preferably now as tax rules may change.
- Make sure that any of your assets that potentially exceed the inheritance tax allowance are passed into a trust at least seven years before the death of either you or your surviving spouse. This should also take into account your own financial position and ensure that your lifestyle needs are met before any tax advice and estate planning proposals are put in place. Advice from an experienced Inheritance tax specialist is essential.
If I already have a will, how often do I need to review it?
The inheritance tax rules changed dramatically in October 2006. If your will has not been reviewed by an estate planning professional since that time it is essential that you deal with this as soon as possible.
Why do I need to bother with estate planning?
Even if you do not believe you will have an inheritance tax problem, estate planning is still a sensible process to go through. At the very least, it ensures that the correct people receive the assets that you eventually want to pass on. It is also essential if you are a small business owner.
In addition, as the divorce rate currently exceeds 50%, it is probably prudent to ensure that your assets are passed into several trusts rather than directly to your children. The use of a trust should help avoid the assets leaving the family in the event of a divorce or potential bankruptcy of your children.
Why can’t I just write my own will and do my estate planning myself?
You can if you choose to. The question is, ‘is this sensible practice?’ – Even if you are not part of the wealthy retired. If your estate is likely to be valued (at a minimum), in excess of £50,000, then the relatively small amount it would cost to correctly write your Will is worthwhile to avoid any possible challenges by other people in the future.
Do I really need to go through all the expense of setting up trusts for my estate planning?
Absolutely. Trusts do not have to be expensive. Our trusts range from £300 to £5,200 depending on the type of trust arrangement you have and the purpose of it. Trusts and the legal wording involved is a very complex area and therefore experienced legal professionals with whom we work with closely should always be employed in this respect.
Any questions on estate planning?
Please call us or Email us.
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