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Information about estate planning with glasses and a pen

Do I need an estate plan?

When I sat down to write this blog, I seriously considered making this the shortest one I had ever written.

The simple answer to the question is YES!!

I cannot think of a single example of a client or individual where I have ever thought, they don’t need a plan, they can simply wing it.

Admittedly the level of plan required will depend upon your personal circumstances as for some it will be as straightforward as making a Will and Power of Attorney*, whereas for others it will likely need to be much more detailed.

What is an Estate plan?

An estate plan is a set of legal documents and strategies that outline how you want your assets to be managed and distributed both during your lifetime and after your death. It's essentially a roadmap for what happens to your children, belongings, property, and finances when you're no longer able to manage them yourself.

Legal documents could include your Will, Power of Attorney, trusts, healthcare directives and if you are a business owner your business succession plan.

In my previous blog Adulting 101 which you can read here I talked about why writing a Will is important and why everyone should have one.

Why is Estate Planning so important?

From my experience, many people take more time planning where to go on their next holiday, which house to buy or what to have for tea than they spend on an estate plan. Whilst all of the above are valid life choices and will seem important in that moment, surely deciding what happens after you have gone should be equally as important, if not more so particularly if it could save your family some heart ache and hassle. Not to mention potentially saving thousands in tax should you be lucky enough to have an estate where inheritance tax is due.

I accept death is definitely not as exciting as where to go on holiday and life can already have quite a lot of doom and gloom in it, to want to spend precious time thinking about death, but it doesn’t make it any less important. It doesn’t have to be laborious, and you will be surprised at the amount of weight off your mind when it's done.

I spent years avoiding writing a Will, but actually sitting down with a Solicitor and formulating a plan was surprisingly reassuring!

Without an estate plan you don’t get to choose who receives your estate. As our previous blogs have highlighted it’s not as simple as your partner or family automatically receiving everything. It may also be costly if your family are required to pay inheritance tax.

There are many benefits to having an estate plan but here is a few to get you thinking:

An estate plan can help make plans for children.

I have lamented before about how few people I speak to who actually have a Will. Unfortunately, this is often people of a similar age to me or younger, many of whom have children.

Having to think about what would happen to your children if you and your partner passed away tomorrow must be truly awful for a parent to consider, but sadly it can and does happen.

In that situation, I think I would prefer to have some element of control. I would like to have expressed an opinion on the details of my child/children’s lives. With an estate plan, you can appoint a guardian, spell out your financial wishes for your kids and leave instructions. The alternative would be for the courts to decide the details of your child’s life.

An estate plan gives you control over your assets.

Have you always wanted your daughter to receive your great grandmothers ring or your son to receive Uncle David’s pocket watch? Do they even know the items exist?

With an estate plan, you determine how your assets are distributed after your death. This allows you to provide for your loved ones according to your wishes and values.

An estate plan helps protect your loved ones.

An estate plan will be different for everyone. For some this will show a need for life insurance, others will simply require a will which specifies exactly what you would want to happen in the event of death. The more complex may require inheritance tax calculations and preparing for a potential inheritance tax bill. An estate plan helps you to understand what your circumstances look like and how to prepare for it. 

Using my holiday analogy again, most people planning to go on holiday would not pop along to the airport without having booked a flight, accommodation and having some form of plan. So just hoping everything will work out fine is perhaps not the wisest plan.

An estate plan helps you to understand what your circumstances look like and how to prepare for it. It could be as simple as understanding what the value of your assets and estate look like now and how they might change going forwards.

An estate plan can help minimise potential inheritance tax.

Do you know if your estate is likely to create an inheritance tax bill? Inheritance tax is an enormous topic, which often creates some interesting and emotive responses from clients.

Given it’s size, complexity and the great many rules to consider I would suggest having a read of our financial guide What is inheritance Tax? for a more detailed account, but in simple terms if your estate is over £325,000 inheritance tax may be due which reduces the amount your loved ones will receive. A further allowance of £175,000 may be available for those leaving their main residence to their direct descendants. There are often things you could do to reduce or eliminate the amount of tax payable. Having an estate plan is about understand the potential for tax, finding solutions and taking steps to safeguard your family.

An estate plan can help loved one’s plan for the future.

If Caroline or I had a pound for every time someone has uttered the words “it will be fine, I am inheriting from my parents” we would be able to retire tomorrow! I normally follow this statement up with a question around amounts and “How do you know?” Most alarming is the number of people who have no idea what their parents’ Wills say or if they even have a Will. It also assumes that the parents they are inheriting from have not needed to spend the money themselves.

British people are fabulously polite and don’t always enjoy the difficult discussions. Whilst it can be difficult to talk about your estate plan, it can help loved ones prepare for the future. Talking to your family and helping them understand how much if anything they can expect to receive through inheritance can improve their personal financial security.

Whilst we cannot predict the future and what you might need from your own money, by discussing your finances with your family it will stop them making inaccurate assumptions that affect them long term.

An estate plan can provide peace of mind.

Perhaps the most significant benefit of an estate plan is the peace of mind it provides. Knowing that your affairs are in order and that your loved ones will be taken care of according to your wishes can alleviate stress and uncertainty. I have already mentioned the impact of simply writing a Will and setting up my Powers of Attorney did for me, and I would consider my circumstances quite straight forward.

Overall, an estate plan allows you to protect your assets, provide for your loved ones, and ensure your legacy continues according to your wishes. Working with an experienced Financial Adviser can help you create a comprehensive plan that meets your specific needs and goals. Even if you don't think you have many assets, having a plan in place can provide peace of mind and make things easier for your loved ones during a difficult time.

For more help and advice or to receive a complimentary guide covering wealth management, retirement planning or Inheritance Tax planning, contact Yorkshire Financial Planning on 01482 275540 or complete our contact form here.

 The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.

*Will writing and Powers of Attorney involve the referral to a service which is separate and distinct to those offered by St. James's Place and along with Trusts are not regulated by the Financial Conduct Authority.

SJP Approved 03/05/2024

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