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Estate Planning UK: 6 actions you should take to protect your assets

Explore the six actions you should take with regards to your Estate Planning – NOW!  It is never too early to deal with these matters as we never know what is around the corner. Those who would prefer to read the information can follow on article below which has been written based on this video content.

1. Review your Will

Perhaps you already have a Will in place. Unless this was drawn up very recently, I would urge you to review the details of the current Will you have in place. Rather than simply reviewing and updating the existing Will you have in place, you may like to consider writing a new one which will allow you to benefit from writing Lifetime Trusts into your Will. More details on Lifetime Trusts, the benefits and how they work, can be found here.

2. Leave clear instructions

What should be included in your will?

Whilst we may believe that the instructions we leave in our Will are clear, I have come across many situations in my 20 years of experience where a client has died and there has been some conflict amongst the remaining family members as to how the instructions are interpreted.

Funeral cost

This is obviously a highly emotional time, and any action you can take now to ease the pressure of any potential or conflict really is worth it for those you care about. Perhaps you have experienced this first hand.

While you may express certain wishes relating to your funeral, have you explicitly stated how much you would expect to be spent on this? This is often a real point of conflict within families. Perhaps you may even want to set up a pre-paid funeral plan to take care of this.

Where are your documents kept?

In addition to the documents held with your Will, you should also leave clear instructions within your Will to contact your financial adviser with regards to your Estate.

Contact financial adviser first

Many people don’t appreciate that they should be contacting a financial adviser before they approach their lawyers. The reason for this is that while lawyers will deal with the legal aspects of dealing with your probate, they won’t deal with the tax aspects.

Often, how the tax is dealt with has ongoing implications in how assets are dealt with. We always suggest our clients contact us in the first instance, and then we advise them how to move forward as we have a lot of experience in dealing with this scenario.

Remember that on death, your Estate is defined as everything you own unless its exempt for Inheritance Tax.

3. Lasting Power of Attorney (LPA)

A lasting power of attorney (LPA) is a legal document that lets you appoint one or more people to help you make decisions or to make decisions on your behalf. You can get a professional to help set this up for you, or this is something you can arrange yourself.

Financial LPA

Everyone should have a Financial LPA in place regardless of the size of your Estate as there will always be financial issues to deal with on your death. This is something we would suggest you arrange yourself online. Yes, this is a service we offer, but if you are capable of dealing with it, then we would advise you do so. Of course, if anything is unclear, you should seek advice, there may be certain clauses that you need to be a little bit careful of.

Once it is registered online, if there’s a problem, then the act of registration will let you know if there’s an issue.We do offer our services in this matter for more complicated cases where people who don’t have children, or their children live abroad. We don’t see the point of charging client’s things that they can do themselves.

Health LPA

We recommend these for people who don’t have children and want to ensure that their wishes are carried out if they were to a coma or have a terminal illness, for example.

If you do have children and you trust them to take the right action on your behalf, then there may be no need for a Health LPA. The exception to this is if people are likely to go into a care home have a Health LPA drawn up is essential to avoid too much control going to the care home. Always get advice in this scenario.

4. Life Policies

If you have any life insurance policies in place, who have you nominated as the beneficiaries? Is that still relevant? Are those policies in Trust? If you die and the policies aren’t in Trust, then the insurance element may payout to your spouse or children directly, which then means it forms part of your Estate and therefore liable for Inheritance Tax.

For this reason, all life policies should be written into Trust. Again, careful thought and clear instruction are essential here. If the beneficiaries predeceased you, have you considered what action should take place at that point?

5. Pensions

The same considerations discussed with Life applies with pensions. There is a death benefit within pensions, and it is important that you have nominated who you want the money to go to.

For most of our clients with quite big pensions, we recommend that they put the death benefits of those pensions to a Trust. If it isn’t placed into Trust and is passed out to your spouse, then it forms part of the widows/widower’s Estate for Inheritance Tax purposes.

So although a pension is already in Trust, you should speak to an experienced advisor about whether it’s sensible to place a secondary Trust, so that the trustees of the pension scheme know who to pay the money out to.

6. Inheritance Tax Planning

Calculate the value of your estates correctly

Within all our Inheritance Tax videos, we stress the importance of making sure that you have calculated the value of your Estate correctly. It’s not the value of your Estate today that counts, it’s what your Estate will be valued when the second person dies.

Although you cannot predict that precisely, if you just took national statistics and you worked with the life expectancy of around 83-85 years, then considering your current health, you can estimate how much could your Estate grow to that point.

House prices have almost doubled in the last 20 years and that could potentially happen again. Therefore, dealing with Inheritance Tax liabilities early is essential if you don’t want to pay the tax. From my years of experience, I cannot stress enough that there is no such thing as too early when it comes to dealing with Inheritance Tax.

Final Word about Estate Planning

It makes sense to deal with this as early as possible because then you know what you’re dealing with. It means you have time to consider and make decisions carefully. If a client approaches us when they’re in their late 70s and 80s, it can sometimes be a little difficult because we’re not sure if they’re going to live for seven years.

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