Have you made sufficient provisions to secure your assets for you and your family? With the help of estate planning lawyers, you could create a tax-efficient plan to ensure that everyone is provided for in the future.
Inheritance tax is often the most common concern, but there are other considerations which you will need to consider to create a robust and workable solution for your family. Here we detail some of the main options…
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Making a will
This is the most important step you can take to help your family. By drafting a will, you will ensure that when you die, your estate will be handled according to your personal wishes.
As well as making the whole process much easier for your family, a legally binding will can also guarantee that your assets will be handled in the most tax-efficient way possible.
Other benefits of writing a will include:
· Setting out where you want your money to go to
· Minimising your inheritance tax liability
· Naming executors who will arrange your affairs when you die
· Appointing legal guardians for your children
· Ensuring your personal items go to the right people
· Establishing trusts and charity donations.
Far from being set in stone, wills can change with your personal circumstances, so it is advisable to revisit them when you get married or divorced or when you have children or grandchildren. In fact, the UK government recommend that everyone has a will and review it regularly, especially after one of these important life events. And you may be surprised how cheap a comprehensive will properly drafted by an experienced lawyer can be. Our Wills start at just £180 plus VAT
If you decide not to make a will, things can get very messy when you die. The courts will divide your estate according to the rules of intestacy. Under these rules, only married or civil partners and some close relatives will be able to inherit.
If you make a will which is not legally valid, the rules of intestacy will decide how the estate will be settled.
Click here to read more about Making Your Will
Estate Planning and Inheritance Tax
With the right advice, you can accurately plan your estate’s inheritance tax liability, so you pass on the maximum amount of assets to your loved ones.
The rules around inheritance tax often change, with Chancellors setting out new thresholds and adjustments to the fine print during their budget announcements. This is particularly important if you are a business owner, or if you hold assets overseas.
That’s why you need the expert advice of our estate planning lawyers who will understand the current situation, so that your plan is kept up to date and legally compliant. This is the best way to ensure that your estate is protected by making the most of tax reliefs, allowances and exemptions.
Take advantage of trusts
Setting up trusts is a highly effective way of managing your money, property or investments when you are gone. Usually associated with providing for children, trusts can be used to carry out your wishes concerning a range of other purposes.
By placing assets into a trust, you are effectively putting them under the control of an appointed person or group of people known as trustees. These will then manage the trust, according to your precise instructions, after your death.
Common reasons for setting up a trust include:
· Passing on assets to children, particularly those under the age of 18
· Funding education, such as university fees
· Providing for vulnerable loved ones
· Making provision for children/partners from previous relationships
· Managing personal injury compensation
· Reducing inheritance tax liability
· Protecting assets from third parties (creditors, former partners etc).
Click here to read more about Trust Creation.
It’s important to realise, however, that just setting up a trust is only the beginning. That trust needs to be properly administered.
Here at Bonallack & Bishop, we are regularly appointed as professional Trustees, when the settlor doesn’t have the right person to help out with with long-term trust administration.
Click here to read more about appointing our Professional Trustee Solicitors
If you have a thriving business and a young family, you may be concerned about who will benefit from your wealth and who will manage your business and family assets.
Succession planning aims to plan for all eventualities, so that you can pass on your wealth in an orderly fashion. With some professional advice, you can draw up a way to safely move your wealth on to future generations.
The plan can cover your personal or business interests. For example, you could arrange for your family to continue to own your business, while hiring an experienced manager to ensure its success. This way your family can continue to benefit financially, while your business and your employees have a secure future.
Succession planning can cover the following areas:
· Setting out what your family will inherit
· Explaining individual responsibilities and how to manage assets
· Minimising inheritance tax
· Dealing with overseas assets
· Choosing how to hand over control of your business and assets
· Charitable donations
· Planning for when you are unable to handle your own affairs
· Appointing professionals to control your business interests.
Click here to read more about selling a family business
Estate planning for care home fees
Paying for care homes can be an enormous drain on a family’s resources. You can give yourself peace of mind by planning ahead, so that everything will be taken care of, while making sure there will still be something to pass on to your family.
Should you need to go into a care home, the local authority will do a financial assessment to see if you qualify for state assistance. If your assets exceed £23,500, you won’t receive any help, so you will need to pay the care costs, which start from around £2,500 per month.
The amount of money needed can quickly become eye-watering, which can make a huge dent in your overall estate. It is common for homes to be sold to pay for care, which leaves little left for the next generation.
It is advisable to plan for care home fees by understanding what the rules are around state funding. You can then structure your will, including your spouse or partner, so that you can protect your inheritance for your family.
There are also different ways to own your home with your partner, so that you can stay in your home when your partner needs to move into a care home.
Click here to read more about Long Term Care Funding
Lasting power of attorney
Planning for the future is not just about what happens when you die. If you are involved in an accident or suffer an illness, you may become mentally incapable of managing your own affairs.
In these circumstances, it is vital that you have in place a lasting power of attorney (LPA) which can be used to detail the decisions your nominated attorney(s) might make on your behalf. LPAs must be signed whilst you are mentally fit, and then need to be registered with the Office of the Public Guardian.
There are two kinds of LPA, one covering your property and financial affairs and the other dealing with health and welfare issues.
The main thing to remember about LPAs is that they are important for people of all ages. Don’t leave it too late, if you are deemed mentally incapable of running your affairs, your assets will be frozen, then it will be up to a court to decide who handles your affairs.
Our lawyers advise all of our clients to to make sure that they have a lasting power of attorney in place – and it is absolutely essential if you run your own business.
Click here to read more about Lasting Powers of Attorney
Otherwise known as advance decisions, living wills give you the opportunity to set out your wishes to refuse medical treatment.
A living will become important if you are unable to communicate your decisions, for example if you are injured in an accident or suffer a serious health problem. It will allow you to refuse medical treatment, even if this could lead to your death.
This document is legally binding, so your loved ones must follow your instructions. This makes it vitally important that you discuss your wishes with your family. It is also necessary to discuss the matter with a healthcare professional, ideally your own doctor, who can advise you on potential risks based on your medical history. They can then add your wishes to your medical notes.
Like all the plans we have discussed here, you should regularly review your living will so that it accurately reflects your current situation. The lawyers in our specialist private client team regularly help clients with living Wills.
Click here to read more about Living Wills.