A key part of anyone’s financial life plan should be a will, power of attorney and a little bit of light philosophy around who gets what and why, what to keep close and what to give away while still very much alive.
Thinking about estate planning?
Sarah Austin, Independent Financial Adviser from Martin-Redman Partners writes:
While I would agree that ‘youth is wasted on the young’, I would suggest that much wealth is wasted on the old. The system of taxation on death is almost dependent on people not making plans to divide their assets, as - with prior planning -the amount received by the taxman falls dramatically. Death tax receipts have climbed significantly in recent years, driven by the house price boom, so each family has a lot more at stake.
Your Independent Financial Adviser (IFA) should be a key part of your estate planning, as they can help at all stages of the process and suggest ways that your wealth can be held to your greatest advantage while you are alive and to your family’s advantage when you are gone. Often, simple things are best; did you know that your pension is likely to be outside of your estate for tax purposes and can be passed to a single individual or small group of people without the delays of probate?
How your money is invested can make quite a difference. Investing in bonds in joint names rather than ISAs can exclude some of your wealth from Long Term Care means tests and be available to meet expenses on the death of one owner. Money held in ISAs cannot be put into trust but surviving spouses can benefit from the ISAs held by the deceased, as they will have an enhanced annual ISA allowance for a short period to reinvest cash inherited.
If I make a wild assumption that you are a couple with children, what should be in place and at what stage of life?
Well before your likely demise – almost as soon as you have “stuff” and children
Have a will written, guardianship and powers of attorney in place
Have a spread of savings in each partner's name and some in joint names
Life insurance in place, and make sure the policy is written in Trust. The can be done free of charge with your Insurance Provider, your Financial Adviser can provide advice on how to complete the forms. The benefit of holding life cover in Trust (not covering a debt/mortgage) is that the proceeds will be quickly paid to your family, rather than the money being caught up in Probate.
As soon as your combined assets exceed £1Million
Consider what would happen to your assets if both of you died at the same time. (The taxman would be entitled to 40% on any excess over two nil rate bands and Main Residence Nil Rate Band).
Consider varying your wills to pass assets to children and grandchildren, rather than just between spouses.
Consider splitting title to the main residence, so it can be passed to children and grandchildren, (or step children or whatever the donor requires).
As soon as your assets become more than you are likely to need in your lifetime
Consider what you could give away to your offspring and deserving causes now, without compromising your personal comfort. To get the most out of the Potentially Exempt Transfer rules, think in terms of 7 years cycles and £325,000 per cycle.
Consider the use of trusts to hold assets for the benefit of the wider family, for education, housing or to tidy up probate when the time comes.
Revisit your pension “declarations of wish”; do they still make sense in terms of who needs that wealth when you are gone?
At regular intervals, especially as your demise gets nearer
Ensure that your executors are willing and able. Check that your will would allow them to appoint a professional and pay reasonable fees.
Ensure that your wishes are clear, and the will was validly signed. Ideally, tell the family what you want and why you want it – poor communication causes more trouble than anything else.
Ensure that your IFA knows your will provisions and the likely executors; your IFA can save the executors stress, time and money.
Arrange an initial meeting to discuss Estate Planning
Please contact us at firstname.lastname@example.org or call us on 01223 792 196 to arrange an initial appointment, at no cost to yourself, with one of our Independent Financial Advisers.
About Martin-Redman Partners
We are a team of experienced Independent Financial Advisers who can advise on your personal or business financial arrangements. We have been building trusted relationships with clients for many years by articulating clear and tailored recommendations in areas ranging from investments to retirement planning, to complex estate planning advice.
We offer expert independent financial advice throughout Cambridgeshire, Leicestershire, Suffolk, East Anglia and the South East. Many of our clients are within, or are in the surrounding areas of Cambridge, Grantham, Stamford, Bury St Edmunds, Frinton on Sea, Ely, Peterborough, Huntingdon, Cambourne, Newmarket, Soham and Oundle.
The information contained is for guidance only and does not constitute financial advice. It is based on our understanding of UK legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly, no responsibility can be assumed by Martin-Redman Partners its officers or employees, for any loss in connection with the content hereof and any such action or inaction.
We provide independent financial advice on investments, pensions, inheritance tax planning and protection. We work with private individuals, businesses and professional introducers, such as accountants and solicitors, to ensure our clients financial advice needs are met.