What is meant by the term ‘estate planning’? In collaboration with financial advisers at SecondSight, we explain the basics, so you can continue to support your family after you die, and have peace of mind knowing your wishes are known by those close to you.

 

What is estate planning?

Wouldn’t it be ideal if we could see into our future and plan accordingly for it?

Unfortunately, no one can be certain of what the future holds, but one thing we can do is ensure that our family are looked after. That’s why it’s so important to have the right financial planning in place; so your money and assets (possessions and valuables) go to the people you want them to when you’re no longer here.

This sort of financial planning and protection is referred to as estate planning.

Thoughtful estate planning doesn’t only ensure your money and assets are passed onto those you choose, it can also potentially reduce your taxable estate and liabilities.

There are several ways to protect your wealth through estate planning, and these can include Wills, gifts, and trusts.

 

Wills

A Will (also known as a Last Will and Testament) is a legal document that states how you would like your money, property, and other assets to be distributed after you die. It can also include other instructions, like who you would like to have guardianship over any children in your care under 18 years of age.

Having a Will in place can also help reduce the inheritance tax (IHT) your family may be required to pay out of your estate when you die. A Will underpins the other IHT and estate planning.

 

Gifts

Gifting assets is one of the easiest ways to transfer your money and is an effective way of reducing potential IHT. In the UK there’s a seven-year rule, which means beneficiaries won’t usually pay IHT on the value of the gift if the person making the gift lives for seven years after the date of making the gift.

Everyone in the UK can gift up to £3,000 free of IHT every tax year, and small gifts of up to £250 can be made to as many people as you like, provided you have not already gifted to them that year. Many people consider gifting, as it allows them to see their beneficiaries enjoy and make use of their financial gift.

 

Trusts

Trusts, when set up properly, can benefit most people. There are many different types of trust, but put simply, a trust allows you to choose how your assets are used, who will benefit from them, when they can be received, and even when they can’t be. Trusts also allow assets to grow rather than being spent.

 

Get help with your estate planning

The rules around estate planning can be complex, which is why we want to make it easier to understand.

Every year in October, Foothold hosts a FREE webinar on the subject of planning for the future, which covers estate planning and Will-writing. Be the first to hear about this webinar – as well as our monthly webinars and other support available – by joining our newsletter.

You can also access our free legal advice sheets, in partnership with Law Express, which cover Wills, probate, inheritance tax, and many other legal topics. Browse them here.

 

The content of this article is for information purposes only and does not constitute advice or a personalised recommendation.