Harry Sims
IFA, Harry Sims discusses the importance of estate planning when it comes to securing your legacy.
Estate planning looks different on a person-by-person basis. For some, ensuring their loved ones are financially secure will be the priority, for others it could be safeguarding their possessions.
No matter what your objectives are, taking a comprehensive approach which takes your will and your tax and financial position account, is crucial.
So, what do you need to consider to create a truly robust estate plan?
Creating a will is central to estate planning. As a legal document which clearly states how you intend to distribute your property, finances and possessions after you pass away, it’s vitally important that your will is up to date.
If you don’t have a will, intestacy laws will be implemented to determine how your estate is distributed upon death. Location, relationship status and family structure are all factors which can impact the rules of intestacy. And the complexities can lead to unintentional consequences, like loved ones being left without support.
By creating a valid will and ensuring that it is up to date, you’re in complete control over your wishes and know that any chances of potential disputes will be lessened.
Lasting Power of Attorney (LPA) is another crucial component of estate planning. It is a legal document which allows you to appoint one or more individuals to make legal decisions on your behalf, or help you in making decisions. These individuals are known as attorneys.
There are two main types of Lasting Power of Attorney: those for making financial decisions and those for making care and health decisions.
If you appoint an LPA for financial decisions, the attorney has authority to make decisions over everything from your bank accounts to selling your home. Whereas a health and welfare LPA enables your attorney to make decisions with regards to your care and treatments, if you are incapacitated.
In the absence of appointing an LPA your loved ones may have to apply to the Court of Protection to act on your behalf. This can be an added financial strain in what is already a tumultuous time.
You can create a lasting power of attorney via the Government’s website here. Once you have drafted your lasting power of attorney documentation, it will need to be registered with the Office of the Public Guardian (OPG).
Ensuring your LPA is registered is crucial. Only then will the LPA become legally effective and allow your attorneys to make decisions on your behalf.
Inheritance Tax (IHT) can have a huge impact on your estate. If your estate exceeds the £325,000 threshold, it could be liable to the tax which is currently set at a rate of 40%.
Gifting your assets, donating to charity and specific tax reliefs can significantly lower your IHT bill, or result in your estate no longer being liable. This requires careful forward planning, and we would always recommend consulting a tax adviser before making any decisions regarding IHT.
Our team of advisers can help to identify gaps in your estate planning, ensuring you have a robust strategy in place to protect your legacy.
We work closely with expert will writers, solicitors and tax advisors. Together we can assist you in planning for the future, every step of the way. Please get in touch with us for further information on estate planning.
THIS ARTICLE DOES NOT CONSTITUTE TAX, LEGAL, OR FINANCIAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.
THE FINANCIAL CONDUCT AUTHORITY DOESN’T REGULATE TRUST PLANNING AND MOST FORMS OF INHERITANCE TAX (IHT) PLANNING. SOME IHT PLANNING SOLUTIONS PUT YOUR MONEY AT RISK, AND YOU MAY GET BACK LESS THAN YOU INVESTED. IHT THRESHOLDS DEPEND ON INDIVIDUAL CIRCUMSTANCES AND THE LAW. TAX AND IHT RULES MAY CHANGE IN THE FUTURE.
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