What is estate planning?
You will work hard your whole life and accumulate many assets. It would be a shame if those closest to you weren’t able to receive what you may have intended to leave for them. This is why estate planning is so important. Make sure to plan for your future and help your family in the best way you can by planning what will happen to everything you own upon your death.
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Questions to be answered in this article
What makes up your estate?
Your estate is not just your real estate, but everything that is in your possession or that you have a particular stake in. Everything that is your responsibility.
- Any personal possessions including vehicles
- Business equities
- Life Insurance
Yes, this does mean that whoever is left with the contents of your estate will also inherit your debts if you have any, which is why you will need to plan accordingly.
Forms of estate planning
The two main ways of legally and formally planning where your estate will go is by drafting up a will or a living trust. A will is a legal document detailing exactly what you want done to the contents of your estate. It comes into effect after your death. A trust is similar, but dictates that your assets are left in the hands of a trustee or a select few trustees.Both of these methods can provide peace of mind when thinking about your closest friends and family’s well being after your death. You can find out more about wills and trusts and which one would suit you best in our article here.
Don’t put it off
If you don’t plan what will happen to your assets, you will have been declared to have deceased “intestate” meaning that your estate will be distributed according to the rules on intestacy. This will mean that they will be given to the people the law dictates are the best people to receive your inheritance, whether that’s your partner, children etc.
Death can be sudden and there’s never any way of preparing for that, but you can prepare for those closest to you.
Do you want certain parts of your estate to be given to people you didn’t intend them to fall to? Of course you don’t, and although your closest family might be who you would like most of your estate to fall to, you may decide to leave certain assets to other friends or family that estate law would never think about. Creating a will or a trust gives you the power to make those decisions even after your death.
Power of attorney
When writing up a will of a living trust, you will be required to appoint either a trustee or someone with “power of attorney”. These people will be the ones that have the power to decide and distribute your estate according to what you have outlined in the documents you have prepared.
Lasting power of attorney actually allows the potential for people to make decisions on your behalf while you are still alive. Illnesses such as dementia and Alzheimers mean that people are sometimes not of sound mind if they are making decisions for the future of their family, so appointing someone with the lasting power of attorney is a very important part of estate planning.
Tax and support
When providing gifts or leaving certain parts of your estate to people, tax can come into play. Inheritance tax is probably the most common form in these areas, so you need to be wary of these laws when planning out your estate.
A solicitor will guide you through the process of planning your estate, and it is probably the best way to go about it. Wills and trusts need to be signed and approved by a lawyer, and given that it is, quite literally, putting your life in their hands, you will need to choose the best of the best to support you and your family through this process whenever it happens.