Moneytree Wealth Management

What you need to know about estate planning

Image for What you need to know about estate planning

What you need to know about estate planning

Estate planning is one of those things you might not have got round to yet, as it’s something that probably doesn’t affect you right now. However, it’s something you should start doing as soon as you can to make sure everything’s sorted when you need it to be.

So, where do I start?

That’s a good question. A sensible way to get started is to make a will. This will set out who you want to leave your assets, like property and important possessions, to. It’s legally-binding too, of course, so your wishes will be met. We’d recommend getting a solicitor to help you with this.

Why should I bother with estate planning?

The main reasons are making sure your loved ones know how you’d like your estate to be managed when you’re no longer here. It can also help reduce the impact of Inheritance Tax on your estate. Currently, Inheritance Tax is paid at 40% on any part of an estate over £325,000, but there are things you can do to minimise this legally, which we’ll come to later.

What should be included in estate planning?

It’s basically anything you can class as an asset. We’ve mentioned property and important possessions (jewellery, cars etc.) earlier, but it also includes money in bank and savings accounts, investments and pension funds, and any insurance policies that’ll pay out on death. Tot up their total value and take off any debts and liabilities in your name and that’s how much your estate is worth.

Passing on property

One of the ways to reduce Inheritance Tax is to pass any property you own on to someone else. If you give it to your spouse or civil partner, there’ll be no tax to pay, which is always good. Zero tax is also payable if you leave property to children or grandchildren, and the threshold increases to £475,000 too, if you do this.

If you pass on property, or any other big-ticket items, while you’re still alive, you’ll need to live for at least seven years to avoid inheritance tax being paid. If it’s in your will, the rules above will apply.

Don’t forget digital assets

This is something that’s becoming increasingly important. Digital currencies, like bitcoin, are often forgotten about in estate planning. Include details and passwords of banking apps and websites in your plan too, so your loved ones can access your online accounts, along with instructions of what to do with these.

Appoint an executor

It’s vital you do this. They’re the person who’ll look after your estate when you’re gone, so they need to be someone you trust. Think about creating a Power of Attorney too, as this will make sure your chosen person (which could be your executor) can take charge of your finances if you’re no longer able to.

Get professional help

As with the previous point, this is something you should always do, especially if you’ve got a big estate or your finances are complicated. A professional financial advisor can help you plan your estate properly for you and your family.

IHT Planning is not regulated by the Financial Conduct Authority.

Nigel Court

Need some help?

Talk to our experts today

How we use your data