People tend to avoid thinking about it, but death is an inevitable force of nature that will affect us all. Thankfully, with a bit of estate planning we can mitigate the financial and legal complications that occur when we pass on, allowing our legacy to be retained or for our property and assets to be passed to those whom we have chosen.
This is an important estate planning legal document detailing your instructions on how the assets in your estate should be distributed after your death. It can also confirm who you wish to care for the children you may leave.
Anyone over the age of 18 owning any asset or property, should seriously think about having a Will drafted.
No Will? – consider the implications:
1. Do you have young children? A Will stating Guardians, will ensure that your surviving children are cared for by those chosen by you. Without this your children will be placed into foster care by Social Services while the administrator of your estate appoints their legal guardian. This is a long and arduous process which can place significant strain on already traumatised children.
2. Unmarried couples, your partner will not be entitled to any part of your estate if a Will has not been drawn up. Furthermore, any children from the partnership may also not pass to the surviving partner and could end up in Social Services.
3. Separated, on your death your estate may be transferred in part or in its entirety to your ex-spouse. In this instance your legacy may not pass on to those who you had wanted it to.
If you already have a Will, congratulations! You have taken the first step in estate planning for the future of your hard earned assets.
However, please be aware that even though Wills don’t go out of date, your circumstances may have changed since you first drafted your original Will. It is highly advisable that your Will is reviewed regularly, keeping your instructions up to date.
Lasting Power of Attorney
The loss of your decision making ability through some form of physical or mental incapacitation, can be just as devastating as your death to those you love. A Lasting Power of Attorney nominates a trusted individual to make decisions on your behalf, should this occur.
If you are incapacitated physically or mentally without a Lasting Power of Attorney in place, an application must be made to the Crown Court. Until this is granted, the power of attorney for your affairs rests with Social Services.
In simple terms a trust is a legal instrument for splitting the ownership of an asset in two:
1. Legal Ownership
2. Beneficial ownership
Trusts are extremely useful in estate planning as they provide flexibility in protecting your assets after death. They can be particularly practical in the following scenarios:
1. Young children – If you wish to gift a sum of money to your children a trust forms a useful tool to ensure the money is wisely spent.
2. Spouse – Should you be married, most of your assets will be transferred to your spouse on your passing. If he/she were to remarry and then divorce, a half of your hard won estate may be lost to a stranger. Worse still this would diminish the potential inheritance to be left to your children.
3. Inheritance Tax – A trust can be used to protect your assets in excess of the current Nil Rate Band from Inheritance Tax. The current tax rate for assets over the Nil Rate Band is 40%.
4. Care Costs – Your property and assets can be protected by a trust from the ever increasing cost of care.
If you have any concerns over your estate planning or protecting your assets for the benefit of those you leave behind, please feel free to call Tax Agility on 02087802349.
This blog is a general summary. It should not replace professional advice tailored to your specific circumstances.