Estate Planning – Why is it so important?
What is Estate Planning?
Estate planning is the process of deciding how an individual’s assets will be managed and distributed when they either become incapacitated or pass away.
Dealing with the loss of a loved one can be a challenging time for those left behind, so ensuring that the right processes have been put in place, whilst you are alive, can help your loved ones manage your estate should you become incapacitated or once you have gone.
Just some of the things to consider when putting your estate plan together are:
- Have you got a Will?
- Would you benefit from setting up any trusts?
- What types of Trusts might you need?
- Who would you like to act as your executors?
- Who are your beneficiaries?
- Do you wish to transfer any specific assets to your beneficiaries for tax purposes?
- Do you wish to outline any specific gifts you wish to give now?
- Do you wish to put in place Powers of Attorney outlining your wishes in regard to your finances or possible future medical care?
How can Estate Planning benefit you?
Protection for beneficiaries
Having a clear plan of action in place allows you to outline who you would like your beneficiaries to be. It also allows you to state how you wish to transfer your assets to your beneficiaries, meaning that you can, if done correctly, pass assets over in a tax-efficient manner.
Without estate planning in place, it could be left to the court to decide what happens to your assets and who benefits from them, which may go against what you would have liked, as well as be a time consuming and expensive process.
Protection of young children
Knowing you have estate planning in place gives you peace of mind should you have young children as it allows you to name who you would like to become their legal guardians. It also allows you to outline how you wish your child be cared for, should you or your partner pass away before your children turn 18.
Importantly, estate planning can also prove particularly helpful in creating unique plans tailored to any specific needs your child may have relating to their health, education and general wellbeing.
Without estate planning in place these decisions could be left to the court to decide.
Reduce Inheritance Tax burden
The estate planning process can protect your wealth while you are still alive and after you pass away.
Estate planning can ensure that you protect your assets against the impact of Inheritance tax and can help you to minimise the amount of tax that would be payable by your estate when you die.
It allows you look at how to pass on certain aspects of your estate and assets whilst still alive and decide on the most tax efficient methods for distributing your estate when you die, to ensure your beneficiaries receive the greatest benefits.
There are many different ways to do this including; gifts, leaving a legacy to charity, establishing Trusts, adding to a pension or even spending your wealth now.
Help loved ones avoid disputes
Family life is often not straightforward and can sometimes involve disagreements. Estate planning can help you minimise potential disagreements between family members, as it clearly sets out how you would like your estate managed when you pass away or are incapacitated.
When estate planning you will designate Executors who will administer your estate and facilitate your wishes once you are gone. Just some of the things your executors are responsible for are:
- Locating and securing your assets;
- Filing any outstanding tax returns.
- Paying off any debts you may have.
- Identifying and notifying all of your beneficiaries;
- Distributing any remaining assets to your beneficiaries in accordance with your Will.
Having appointed executors should alleviate family tensions and conflicts and hopefully avoid any legal action, as your executors will ensure everyone is aware of exactly what they are entitled to and who will benefit from your estate.
Talk to Tollers
These are just some of the benefits of estate planning, each plan is tailored to the individual and their estate and may encompass other elements. This is why it is important that when putting your plan in place you seek out the best possible professional and legal advice.
For further advice and guidance on Estate Planning and how to put this important set of documents in place…Talk to Tollers on 01604 258558 and our experienced Trusts and Estates team will happily assist.
find out more here on Estate Planning.