Estate Planning Myths That Just Won’t Die!
Estate planning remains probably the most misunderstood area of Financial Planning. Some clients think they just need a little Financial Planning but not any Estate Planning. Some consider themselves too old or too young to even think about it. Policy changes from HMRC that hit the headlines do nothing to inspire confidence in a notoriously complex system.
It is important to redefine Estate Planning in your mind as a crucial part of Life Planning. It is about defining and living out your legacy during your lifetime, enabling you to enjoy the impact it has on the people and the organisations you choose to support. It’s about ensuring loved ones who depend on you or your income are protected in the event of your incapacity or your death, and it’s about ensuring your wishes are communicated clearly and can be met.
Let’s clarify the most common misconceptions about Estate Planning:
Is Estate Planning is only for the very high net worth?
Often people assume Estate planning is designed purely for the ultra rich to protect their assets. However if you own property and assets, have a bank account and investments, you have an Estate. If you have a spouse, minor children or other dependants, an Estate plan is critical for protecting their interests and their future needs. There are many potential aspects to an Estate plan but among the factors you can consider are ;
Protecting those who depend on you and naming guardians for minor children.
Specify the recipients of all your property after your death
Transfer property to your heirs in a tax efficient manner, and manage all tax exposure
Name your executors and potentially avoid probate
Document the type of care you wish to receive if you become incapacitated
Express your detailed wishes for your funeral arrangements and all related expenses payment.
Is Estate Planning only about Distributing Assets after death?
Legacy and incapacity planning are two areas that encompass far more than just distributing assets. Legacy planning is unique to you and your family. Being able to pass on a meaningful bequest is life-affirming. Incapacity planning helps plan and prepare for unexpected events at every stage of your life and can significantly impact on your loved ones.
Does a Will oversee the distribution of all of my assets?
Your Will is a legal document that instructs how your property will be distributed after your death. It allows you to name an Executor, who is your personal representative charged with overseeing your wishes are carried out and ensures probate is correctly executed.
Probate is the court process that’s required to validate the Will and ensure all assets are rightfully transferred. However, certain assets sit outside most Wills, including life insurance policies or Pensions. These assets transfer directly to the names beneficiaries and are not subject to probate. That’s why it is important to review your account beneficiary designations from time to time. For example, if your Will and/or Trust names your current spouse as the beneficiary or co-Trustee since these assets sit outside a Will or Trust they are not governed by those documents, and previously named beneficiaries will prevail.
In addition to a Will its important to prepare a Power of Attorney to empower someone to carry out your financial or legal decisions if you are unable to act. A Living Will is also extremely beneficial. It is a written statement detailing a persons desires with regard to future medical treatment in circumstances where they would be unable to express their informed consent. It can also include an advance directive. This is a Living Will which gives durable Power of Attorney to a decision maker, remaining in effect during the extent of the incompetency of the person making it.
Trusts can provide a watertight plan for the safe and accountable management of family assets and to direct their use and distribution in accordance with your wishes.
Once a Plan is Established I Never Refer to it Again
Estate Planning is never a one-off proposition, as life is constantly evolving. Factors such as your preferences, goals and of course families are changing over time. A marriage, a divorce or the arrival of a new grandchild, or perhaps tax law changes or major economic events can all change our priorities. Consider for example your ex-spouse ending up receiving absolutely everything after your death because you didn’t update your Plan. Keeping family members and your Executors informed about where to find your legal documents, and your financial details is crucial. Communication is key because it can mean the difference between loved ones hoping they did what you wanted and knowing with certainty that they carried out your wishes.
For the total peace of mind that efficient Estate Planning brings you need to contact an experienced, impartial and professional advisor. Contact us now https://www.bluebond.co.uk/contact-us/