What is Estate Planning?
What is Estate Planning?
Working out the best way to pass on your estate is critical to any effective financial life plan. Not only does estate planning maximise the wealth you can pass on, but it also helps to avoid conflict, protect your best interests, and provide the peace of mind you need to live life worry free.
Here at Hansford Bell, we take a forward-thinking approach to money. Specialising in financial life planning, we help our clients create bespoke, highly robust plans that align with their personal goals and wishes – during life, and after it.
In this blog, we provide an overview of estate planning and explain why it’s so important.
What is Estate Planning?
Estate planning is essentially a detailed strategy for your end of life and assets. It outlines how your wealth and possessions should be passed on, arrangements for your funeral, as well as what should happen if you become incapacitated. It also aims to structure your estate in such a way that you minimise the inheritance tax implications, and pass property on to your loved ones in the best possible way. Above all, it’s about clearly setting out your wishes to make sure they are fully respected when you’re gone.
The creation of a will is central to your estate plan, but there are a range of other documents to consider too, including:
- Financial power of attorney.
- Medical power of attorney.
- Trusts.
- Living will.
- Guardianship for children.
What is an Estate?
Before we explore estate planning in more detail, let’s explain exactly what we mean by ‘estate’. Your estate is made up of everything you own. Typically, that means property, investments, pensions, savings, jewellery, and cars, as well as things like clothing and personal possessions where value is more intangible.
Who is Estate Planning For?
Estate planning isn’t only for the rich or the elderly – it’s for everyone over 18 who owns anything. And that’s a lot of people. After all, none of us can take our property with us. Everyone has their own individuals wishes regarding their property and affairs, and an estate plan is the process that makes sure these are followed. It also protects your best interests in the event that you become incapacitated, either through illness, injury, or mental decline. Simply put, anyone can benefit from estate planning, and it’s never too early to get started.
What Happens if You Don’t Plan Your Estate?
If you don’t plan your estate during your lifetime, your death will be classed as intestate. That means the courts will decide how your assets get distributed according to the laws of intestacy, which may not reflect your intentions. More than that, in these circumstances, the process of granting probate can take months if not years, making a difficult time even more stressful for your loved ones. Not only can larger than normal legal fees be incurred, but the lack of clarity surrounding your intentions can lead to disputes and tensions between those who have survived you.
Importance of Estate Planning
Protects Children
It’s natural to worry about what might happen to your children when you’re gone, but estate planning will help make sure they’re looked after and put your mind at ease. Depending on their age when you pass away, this can be done through trusts, inheritance, or arranging guardianship.
Reduces Tax Bill
More and more of us are having to deal with inheritance tax, but there are a range of measures you can take to improve the tax efficiency of your estate. Result? The ability to transfer the majority of your hard-earned wealth to the next generation.
Respects Your Wishes
Estate planning involves the creation of a number of legally binding documents which set out your wishes when it comes to inheritance, who should manage your affairs if you become incapacitated, who can make medical decisions on your behalf, and what your funeral arrangements should be.
Avoids Disputes
Sometimes, the death of a loved one can lead to disputes and disagreements between family members – particularly if they have not left clear intentions behind. By communicating your wishes during your life and after it, you’ll help your loved ones navigate with greater clarity.
Saves Time & Money
As discussed, forgetting to plan your estate can make the probate process much more complicated and drawn out. The paperwork and court appearances involved will all have to be paid for by your estate. In naming your executor and beneficiaries, you’ll significantly reduce this expense.
Takes Care of You
Estate planning isn’t just about the next generation; it’s also about your end of life. A living will and power of attorney protect your best interests if you become incapacitated by detailing who can make medical and financial decisions on your behalf, and how life support should be administered.
Plan Your Estate with Hansford Bell.
Thinking ahead? Our friendly team is here to help you plan your estate in a way that fully reflects your wishes. We’ll help you structure your assets, reduce your inheritance tax liability, and protect your wealth. Get in touch with us today and arrange your free initial consultation. We’re always here to talk!
Read next: How to Plan for Inheritance Tax
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