Estate Planning
A quick overview of estate planning
Estate planning is the process of organising your financial affairs to ensure your assets are managed and distributed according to your wishes after you pass away or if you lose the capacity to make decisions. It involves more than just writing a Will’ it’s a strategic approach to protecting your legacy and minimising tax burdens for your loved ones.
Key features of estate planning
Estate planning is fairly bespoke, although usually involves a will as a minimum. Here are some other elements of estate planning that may apply to you, depending on your circumstances and preferences:
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Wills - A legal document outlining who inherits your property, money, and possessions when you die
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Lasting Power of Attorney (LPA) - This specifies an appointed, trusted individual(s) to manage your health and/or finances if you become incapacitated and unable to make your own decisions
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Inheritance Tax (IHT) Planning - This is the process of using legal exemptions and thresholds to reduce the tax bill your beneficiaries might face after you die
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Trusts - A trust is a legal arrangement to hold assets for beneficiaries for a defined period after you die. These are often used to protect wealth for children or vulnerable adults
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Guardianship - Is the process of formally naming who should look after any of your immediate children or other minors in your care in the event of your death
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Funeral Wishes - While not legally binding, estate plans often include instructions for your final arrangements, such as whether you would like burial or cremation
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Eligibility criteria and other legal requirements
To create legally binding estate planning documents in the UK, you must be at least 18 years old and have the mental capacity to understand the implications of the decisions you are making. For a Will to be valid, it must be signed in the presence of two independent witnesses who are not beneficiaries. Similarly, an LPA must be registered with the Office of the Public Guardian (OPG) before it can be used.
This table highlights the factors that impact the complexity, cost, and effectiveness of a full estate plan.
|
Factor |
Impact & Key Considerations |
|
Estate Complexity |
Having multiple properties, business interests, or foreign assets increases the legal work required and the overall cost |
|
Family Structure |
Complex families (e.g., step-children or second marriages) often require bespoke ‘Life Interest’ trusts to ensure everyone is protected |
|
IHT Thresholds |
Estates worth over £325,000 (or up to £1m for couples with property) face a 40% tax rate, requiring more advanced planning |
|
Choice of Executor |
Appointing professional executors such as solicitors, provides expertise but incurs fees, usually a percentage of the estate value. Many people choose trusted friends or non-immediate family members to perform this function, which is also legal |
|
Mental Capacity |
If there are concerns regarding health, a medical practitioner may need to certify your capacity and ability to fully understand the decisions made at the time of signing |
|
Document Type |
A simple Will is relatively low-cost, whereas incorporating Trusts or multiple LPAs increases the initial setup fees |
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FAQs
If you die without a valid Will, you are said to have died ‘intestate.’ Your estate will be distributed according to strict legal rules rather than your personal wishes. This often means that unmarried partners or close friends receive nothing, and the process of settling your affairs can become significantly more expensive and stressful for your surviving relatives.
Connect with an estate planning specialist
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