Most people will not be familiar with the term Estate Planning and I expect you might be sat there scratching your head; conjuring up an image of a vast Manor House in the countryside, surrounded by an extensive area of land which is owned by a wealthy family and wondering how this might have anything to do with you.
Well actually, Estate Planning is relevant to all of us, regardless of how much wealth we might possess. Estate Planning sits alongside making your Will and is a key part of putting your affairs in order for later in life.
Planning ahead and taking the necessary steps now can help to make the lives of your loved ones easier and less stressful when you’re no longer around. A well structured and comprehensive Estate Plan can also help protect your estate for your loved ones as well as reduce the impact of Inheritance Tax and other costs. Ultimately, an Estate Plan will save your family time, money and stress when dealing with your estate.
We appreciate that most people do not spend much time thinking about their Estate Plan, there are often more pressing things to think about at that time but it is one of life's biggest decisions. An estate plan clearly details your wishes to your loved ones about what you would want to happen once you're gone and how you would want your estate to be managed.
Your estate will include all manner of things, such as your property, your possessions, your savings and investments, any jointly owned assets, as well as life policies and pensions. But how do you go about starting your Estate Plan?
Simply put, all estate planning involves answering a few simple questions:
Who will receive my property and belongings when I’m gone?
Who will be entrusted with transferring my property to my beneficiaries?
Who will make my health and well being and financial decisions if I am unable to?
Who will I nominate to take care of my children if both parents are deceased?
The answers to the questions above are the foundation to any Estate Plan and which give rise to other factors and concerns which you may not have considered such as avoiding probate, minimising taxes and other costs, protecting assets, safeguarding your loved ones' inheritance and establishing trusts for vulnerable individuals. All of which can be benefits of Estate Planning.
Now it is up to your Estate Planner to pull all of this together via the creation of your estate planning documents, which might include a Will, Lasting Powers of Attorney, a Trust Deed or Declaration of Trust as well as a Funeral Plan. Estate planning can be complex, and there is usually no one-size-fits-all solution.
Most estate planning documents provide solutions for three areas of life:
allowing others to act on your behalf if you become incapacitated,
administering and distributing your assets after your death; and
asset protection and management for beneficiaries after your death.
This will aid in avoiding the need for a Deputy to be appointed if you become incapacitated; a process which can be very stressful, timely and costly, as well as ensuring that your estate passes to your loved ones as tax efficiently as possible.
There is a common misconception that having a Will avoids Probate but this is not the case. Probate; more specifically Estate Administration can be time consuming, lengthy and expensive and since your Estate Plan will control the distribution and management of your estate after your death and even during your lifetime if this is what you want; then a consequence of this can be avoiding the need for Probate when the time arises since in some situations your assets will no longer form part of your estate and will have been placed in Trust.
With so many options available in creating a comprehensive estate plan, it can quickly become overwhelming. However, with the proper guidance, your estate plan can be easily crafted to fit your needs while giving you peace of mind. Make sure you work with an Estate Planner who is qualified and experienced, such as a Trust and Estate Practitioner (TEP) who is a member of the Society of Trust and Estate Practitioners (STEP), or a member of the Institute of Professional Willwriters (IPW) or Society of Will Writers (SWW) or a solicitor who specialises in Private Client work.