Estate planning is something that everyone will need to do at some point in their life, to sort out their future and the future of their family. Across this article, you will find explanations to all things estate planning, so that you have an idea of where to begin.
What Estate Planning Is
Estate planning refers to organising your affairs, financials and assets so that there is a clear plan as to what will happen to them after you die. Many people choose to leave this until later on in their life, but this can just add stress to family members and yourself further down the line.
It’s also just a great way to get ahead of your finances and gain more control over your assets. Aside from that, there are also other benefits, such as reducing the amount of inheritance tax that you pay, and ensuring your loved ones are well looked after in later life after you’re gone.
Inheritance Tax
Inheritance tax is a type of tax that is paid when someone dies. The amount that is paid is calculated against the value of your remaining assets, assuming they are over £325,000. This will include everything from property, savings, financials and belongings.
The current tax rate is about 40%, but there will be some concessions available. Of course, every situation is unique, so it's best to not count on these as they aren’t watertight. Inheritance tax rates can change over time, which is why some people work with tax specialists and legal experts to protect their assets against the impact of inheritance tax.
How To Choose A Specialist To Work With
For you to commence with planning your estate and managing your future, you will need to work with a legal specialist to prepare the documents and make them a reality. You will have different legal services to consider, so it’s best to do your research and prepare some questions to ask them.
For example, do they offer any discount in regards to using their service again? Or do they have an understanding of your unique circumstances, either because of their experience or knowledge in general? If they have worked in circumstances like yours before, then they may be able to get your will drafted sooner with no mistakes than other solicitors.
You should get in touch with a legal service before taking them up to represent you, as you will want your will to be to your wishes, with your estate planned the way you want. That’s why you should contact a dedicated will writing and estate planning service such as E.L.M that allow you to meet through video meetings remotely, as you know they understand the laws surrounding estates, and how they can assist you in the best way possible. After you’ve sent a short message, you will be able to find out more directly from the legal services itself, all of which you can do from home via video meetings.
Why It’s Important To Be Prepared
You need to sort out your wills and estate planning as soon as possible, as it can help give your family complete peace of mind. Of course, nobody in your family will want you or anyone to pass away, but they can rest easy knowing that they will be taken care of if the worst was to happen.
The earlier that you can start planning these steps, then the better off you’ll be. The process of drafting a will is not final, you will be able to make amends as you go in the future. This could be due to changes within the family, or because of newly acquired assets and property.
The point is, if you can arrange your affairs in some way before you die, then you will be able to make it easier for all of your family. Inheritance tax was mentioned earlier, but did you know it’s possible to avoid inheritance tax with a well-crafted estate plan, through something known as a trust.
The Steps Involved
For estate planning and will writing in general, there will be four key steps involved with the entire process. The first of which, is to write the will, and appoint someone as an executor. An executor is essentially someone who you want to execute the will. If you don’t appoint anyone, then it will likely fall to a legal expert.
Within the will, you should have a comprehensive list of your assets, alongside any debt that you may have. This will include any property assets you own, alongside any mortgage plans that will need to be continued to be paid. If you are fortunate enough to have any savings or spare funds, then these should also be accounted for.
The third step will be to decide on how you plan to combat inheritance tax if indeed you are. The best way in which you can do this is through recording or planning to give cash gifts, as gifts won’t technically be in your possession, making them immune to inheritance tax.
The last step will be to sort out any provisions that you need for your funeral arrangements, as well as outlining your plans for your pension. All of this will be so that your family and friends will have a better idea of your wishes so that they can make the arrangements as soon as possible.
What A Trust Can Do
A trust fund is a popular way to get around inheritance tax. Traditionally speaking, trust funds are used to help set up assets for children who may not yet be financially independent. They can be used to help provide advanced payments to family members who may need their inheritance early, but they have other benefits for those who have life insurance, such as receiving tax relief.
That’s because if you are without a trust fund, your life insurance payout will be directly added to your estate, which will be taxed. But within a trust, it is ineligible to be included in any inheritance tax.
A Lasting Power Of Attorney
It may also benefit you to be more aware of what a lasting power of attorney is. Some people get this role confused with the executor of the will. The key difference is that an executor distributes your will and assets according to your wishes, whereas a lasting power of attorney will be an individual who will have to make the important decisions regarding your finances if you are no longer able to.
Situations in which this may be relevant include if you’ve had a life-changing accident or if you have been left incapacitated. You will need to seek out legal counsel to make this happen, and to help set up the power In general.
Funeral Arrangements
Having a funeral plan ahead of time is a crucial step in arranging your estate plan. This will help you to arrange your funeral to your wishes, whilst also saving stress for your children or loved ones for after you die.
There will be funeral services that you can hire and take advantage of to create the ideal funeral. The benefit of contacting these ahead of time is that you can arrange a plan to make monthly payments beforehand so that your family won’t be burdened financially after you die. It’s also possible that your life insurance could cover and account for the funeral costs.
