Do you want your loved ones to get specific assets after you pass away? At North Wales-based Ascent Financial Planning, we can ensure it happens.
What does estate planning cover?
Estate planning is a way of ensuring that your assets, for example, property, savings, investments, and personal possessions, are allocated according to your wishes after you pass away.
An estate plan includes:
- A will: A legal document specifying how your assets should be divided after your death.
- Trusts: Legal arrangements that allow assets to be managed on behalf of beneficiaries, often used to protect assets or reduce inheritance tax.
- Power of attorney: Appointing someone to make decisions on your behalf if you become incapacitated.
- Inheritance tax (IHT) planning: Strategies to reduce the inheritance tax liability on your estate.
When should people start planning?
You might assume that estate planning is for those looking to retire, but in fact estate planning is a wise move at any age.
What are the risks of not having a plan in place?
- Intestacy: Without a will, your estate will be allocated according to UK intestacy laws, which may not reflect your wishes. Research shows that 53% of adults aged 50-64 and 22% of those aged 65 and over do not have a will.
- Tax: Without estate planning, you could be liable for more inheritance tax.
- No provision for loved ones: Your family may not receive the inheritance you had in mind for them.
- Probate Delays: Without a clear estate plan, lengthy probate processes can impede the allocation of your assets.
How estate planning can reduce tax and protect family wealth
Protecting your wealth for future generations and reducing your tax can both be achieved via smart estate planning. Currently, the IHT tax-free threshold is £325,000, with anything above this amount subject to a 40% tax. However, estate planning can help mitigate this through a range of strategies:
- Gifting: You can give away assets during your lifetime, and if you survive for more than seven years, they won’t be subject to IHT.
- Using Trusts: Trusts can reduce your taxable estate by holding assets outside of your estate for inheritance tax purposes.
- Residence Nil-Rate Band: If you leave your main home to direct descendants, you can benefit from an additional tax-free allowance of £175,000, on top of the £325,000 threshold.
When to discuss estate planning and what to expect
Some key moments when you may need to discuss estate planning with our financial planners include:
- Major life changes
- Asset accumulation
- Health concerns
- Family disputes
To plan your estate, you will need to:
- Assess your net worth by adding up all your assets and taking away any liabilities
- Work out where you want everything to go after your death.
- Make the right arrangements (like a will) to make sure your wishes are legally binding
Next steps:
If you want to organise your assets for the future, now’s the time to contact our North Wales-based team North Wales, here at Ascent Financial Planning.
Trusts, Powers of Attorney and Inheritance Tax Planning are not regulated by the Financial Conduct Authority
