Estate Planning

The importance of drafting a Will

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Protect your family from uncertainty and potential conflicts

Many people still lack a properly organised estate plan despite the numerous benefits of writing a Will—such as getting our finances in order, planning our legacy, and ensuring that our loved ones are well looked after.

By taking the proactive step to draft a Will, you can protect your family from uncertainty and potential conflicts, ensuring that your legacy is preserved according to your exact intentions. If you haven’t done so already, now is the time to prioritise this important task and secure the future for those you care about most.

A way to get assets in order

Making a Will often prompts a financial review. It typically identifies gaps in people/s financial planning – often inadequate life assurance or disability income benefit cover. If they’re in an occupational pension scheme, they may need to update their nomination of beneficiaries form. Without a Will, Intestacy laws determine who inherits your estate and in what order.

If you don’t have a valid Will, then effective state legislation steps in and provides a series of rules with you may not wish to apply to your assets and your family. It’s also relatively inexpensive compared to the problems you can create for your family without making a Will.

Specifying sentimental gifts in your Will

We dedicate much of our lives to working hard to provide for ourselves and our loved ones. As we accumulate assets and cherished possessions over time, it becomes crucial to ensure that they are distributed according to our wishes when we are no longer around. Importantly, the gifts mentioned in a Will do not need to be limited to property or cash. This can also include sentimental items with significant emotional value but less material worth, These could be family heirlooms, personal mementoes, or any treasured possessions that we wish to pass down to future generations. By specifying these sentimental gifts in our Will, you ensure that these meaningful items are handed down to those who will appreciate them most.

Leave money to a good cause

While family and friends are likely to be the first considerations when writing a Will, many people also take the opportunity to give a helping hand to causes close to their hearts. For many charities, gifts in Wills account for a significant amount of their income. Without these legacies, much of their work would not be possible. Leaving money to charity could also cut your Inheritance Tax bill.

Some charities will even help you write a Will if you leave them a donation. By leaving 10% of the value of your estate to a charity, you could reduce Inheritance Tax payable on some of your assets from 40% to 36%.

You choose the legal guardians

A Will allows you to appoint one or more legal guardians for children aged under 18. Your chosen guardians will take over the role of bringing up the children on your behalf. This ensures you remain in control and entrust this significant responsibility to people you deeply trust. In addition, having a Will grants you the peace of mind that comes with knowing your children’s future is secured. By choosing guardians, you ensure they are cared for by individuals who share your values and vision for their upbringing.

You choose the executors

Choosing your own executor, the individual responsible for implementing the terms of your Will, can ensure that your estate is distributed by someone you trust. You can appoint people you know and rely on to be your executors and manage your estate. Alternatively, you can appoint professionals to serve as your executors. An executor plays a crucial role in managing your affairs posthumously, ensuring that your wishes are carried out accurately and efficiently. This includes settling debts, distributing assets, and handling other legal matters related to your estate.

“TAKING OUT A LIFE INSURANCE POLICY CAN FURTHER ENSURE THAT YOUR FAMILY IS FINANCIALLY SECURE. LIFE INSURANCE CAN SERVE AS A SAFETY NET, PROVIDING FINANCIAL SUPPORT TO YOUR LOVED ONES IN THE EVENT OF YOUR PASSING.”

You ensure partners are looked after

There’s a common misconception that the rules provide for a ‘common-law’ husband or wife. If you’re unmarried or in a registered civil partnership and don’t have a Will, your partner won’t inherit anything under the laws of intestacy. A Will ensures that couples who live together but aren’t married or in a registered civil partnership can leave their assets to each other. Taking out a life insurance policy can further ensure that your family is financially secure. Life insurance can serve as a safety net, providing financial support to your loved ones in the event of your passing.

A Will should be updated

A Will should be reviewed at least every three years and whenever there’s a significant live event, such as the birth of a child or when children become adults. Keeping your Will up to date ensures that it reflects your current wishes and circumstances. Amending a Will is straightforward – you can rewrite parts of it with something called a codicil. This allows you to make minor adjustments without drafting a completely new document.

Peace of mind

Making a Will can relieve a considerable burden on your mind. Completing a properly-arranged Will provides peace of mind, knowing that your assets will be distributed according to your wishes. Writing a Will places you in the driver’s seat for many important decisions, impacting not just your life but also those of your family and friends.

Once written, many people feel great relief, especially when they can cross it off their ‘to-do’ list. However, remember to update it as needed to ensure it remains relevant.

Looking to draft or update an existing Will?

Please contact us for further information on drafting a comprehensive Will and safeguarding your legacy for future generations. Whether you’re just beginning the process or looking to update an existing Will, we’ll help you navigate every step confidently and easily.

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Why is it important to have a Will?

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By taking the proactive step to draft a Will, you can protect your family from uncertainty and potential conflicts, ensuring that your legacy is preserved according to your exact intentions. If you haven’t done so already, now is the time to prioritise this important task and secure the future for those you care about most.

If you’d like to speak to us about your family’s financial future, get in touch to find your local adviser:


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After Retirement – helping your loved ones

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Your financial adviser will have helped you plan a secure retirement lifestyle and naturally your thoughts will now be turning to how you can help your family now and in the future. Your adviser will guide you through key stages including 

  • Estate planning 
  • Legislation changes and their impact 
  • Tax implications 
  • Gifting 
  • The role of Wills, Trusts and Lasting Powers of Attorneys 

Your adviser’s role is to ensure you enjoy your retirement and bring expertise into successfully passing on your wealth in the right stages. 

If you would like to discuss your and your family’s financial future, please get in touch.

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Financial Planning conversations you need to have

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Protecting your legacy and boosting your children’s financial security

Discussing finances can evoke anxiety or discomfort, and this tension doesn’t ease when family members are involved. Nevertheless, parents of adult children are responsible for discussing their financial future – particularly retirement and estate planning. Doing so ensures their children can provide support or fulfil their wishes as needed.

Open conversations can provide financial planning opportunities and improve your loved one’s future finances. The sooner you talk about money, the better your chances are of protecting your legacy and boosting your children’s financial security.

How can you make financial planning conversations go smoothly?

Your Estate

Let’s begin with inheritance, which is a hugely emotive subject. While discussing who will inherit a portion of your estate after you have passed away might seem difficult, doing so could prevent future difficulties or disagreements.You can explain your plans and why you have made certain decisions. This could also provide an opportunity to consider if your will needs updating. For example, you might need to amend your will to ensure your estate can benefit from the residence nil-rate band, which could reduce your estate’s Inheritance Tax (IHT) bill.

Lifetime Gifting

Although you’ll want to avoid giving away money that you might need in the future – towards care costs, for example – you might wish to consider passing on some wealth to future generations within your lifetime. Using pensions,Trusts, and life assurance are just some ways you can do this.This can be complicated, but we can work with you to give you peace of mind that you’ve laid the firmest foundation for your family’s future.

It’s possible to gift tax-efficiently during your lifetime using various allowances and exemptions. For instance, you can give away up to £3,000 per year free from IHT. Additionally, you can make small gifts, such as potentially exempt transfers (PETs), become exempt from IHT if you live for at least a further seven years after making the gift.

Power of Attorney

Dealing with a deterioration in mental capacity can be particularly tough on your family. If you can no longer make decisions for yourself, you’ll want to ensure someone you trust is legally in this position. You can put in place a power of attorney, a legal document enabling you to name one or more people to look after your affairs if you lose capacity.Without this document, an application must be made to the Court of Protection (the sheriff court in Scotland), which can be a complex, costly, and lengthy process for your loved ones.

“When I’m gone” Information

Discuss where you’ll safely leave basic details of your bank accounts, savings, investments, and utility providers. Compiling a list of this information is time well spent and could be invaluable to your family if you lose capacity or pass away. Talking to your family about inheritance might seem difficult, but we can help start the conversation and guide your through what may be an emotional process.

Succession Planning

Building a succession plan that suits your needs ensures you have laid the firm foundations for your family’s future. It’s crucial to regularly review and update this plan to adapt to any changes in your personal circumstances or legislation. The planning process leads to understanding each family member’s motivations and personal drivers. This will enable you to assess the direction of your vision and the options available to your family to create a plan for your family’s future.

Will you have a financially secure and fulfilling retirement?

Please contact us for more comprehensive advice on managing your family’s financial future, including estate planning, lifetime gifting, and setting up a power of attorney. We’ll assist you in navigating these challenging discussions and ensuring your financial legacy is secure.

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Free Guide: Estate Planning

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What is the importance of estate planning?

Estate planning is about more than just tax. It is about making sure the people left behind are financially supported, that your assets are protected and that the tax your estate pays is fair.

Wealth preservation and wealth transfer are becoming an increasingly important issue for many families today.

Your estate consists of everything you own. This includes savings, investments, pensions, property, life insurance (not written in an appropriate trust) and personal possessions. Debts and liabilities are subtracted from the total value of all assets

There are various ways to legally avoid paying inheritance tax and we have produced a free Estate Planning guide to support you with Inheritance Tax Planning: Download Here

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Passing down wealth

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4 considerations when passing down wealth to your family

Age

If you are younger, there may be more time to accumulate assets. If older, you could transfer wealth sooner to maximise the amount passed to beneficiaries.

Value of estate

If your estate is large, you may consider transferring wealth to minimise Inheritance Tax (IHT) liabilities. If it is small, you may not need to worry about IHT and can afford to wait.

Age of beneficiaries

If your beneficiaries are young, they could use the money to help further their education or buy a property. If older, they may need the money to support themselves in retirement.

Types of assets

If the assets are liquid (e.g. cash), they can be transferred immediately. If the assets are illiquid (e.g. property), it may take longer to transfer them.

Start your estate planning journey

Estate planning, inheritance tax planning and wealth transfer within families requires expert advice. Please get in touch today so we can help you and your family every step of the way.

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Give while you live

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What will your financial legacy look like?

April 2023 brought a host of changes to the UK’s tax regime, with some thresholds for taxes such as additional rate Income Tax being lowered while others, such as Corporation Tax, are increased.

However, the Inheritance Tax (IHT) nil-rate band has remained stagnant at £325,000 since 2009, despite the meteoric rise in property prices over the same period. This has resulted in an all-time high of £6.1bn being collected in Inheritance Tax in 2021/22.

Freezing of the nil-rate band

Chancellor Jeremy Hunt announced in the Autumn Statement on 17 November 2022 that the government had frozen the IHT thresholds for two more years. As the threshold was already frozen until April 2026, it means that the threshold is now frozen until April 2028.

If you own a home worth over £1 million, there is a risk that your loved ones may face a costly IHT bill upon inheritance, due to the freezing of the nil-rate band. While there is an additional residence nil-rate band (RNRB) of £175,000 that can apply when passing on the property you lived in, married couples or those in registered civil partnerships can transfer the allowance, enabling most couples to pass on up to £1 million tax-free, assuming they pass on their home to their direct descendants.

Wealth to future generations

However, if your total estate exceeds £2 million, the RNRB will be tapered. For every £2 by which your individual estate exceeds £2 million, the RNRB will be decreased by £1. Professional financial advice can help homeowners plan to mitigate the impact of IHT.

Downsizing is a popular method to manage IHT, but this presents the challenge of passing on the sale balance to your loved ones. Planning for the transfer of wealth to future generations can be an uncomfortable topic for many families. However, proper estate planning can ensure a smooth and stress-free transition of family wealth to loved ones.

Feeling financially squeezed

It’s understandable that many people are feeling financially squeezed in the current climate, and as a result, we are likely to see a rise in ‘giving while living’. This refers to the practice of lifetime gifting to loved ones, particularly adult children who may be struggling to make ends meet during the ongoing cost of living crisis.

However, it’s important to note that the extended freeze on thresholds will mean that many people will now need to seek professional financial advice more than ever to protect their wealth and ensure that it is passed on according to their wishes, without being caught out by unforeseen taxes in the future.

Your family’s financial future?

We understand the importance of addressing these issues in a calm and objective manner. We can assist you in creating a comprehensive succession plan that maximises the amount of wealth passed down to future generations while minimising tax implications. Let us help you secure your family’s financial future with careful estate planning. To find out more, please speak to us.

Source data: [1] https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk/hmrc-taxreceipts-and-national-insurance-contributions-for-the-uk-new-annual-bulletin#inheritance-tax

Important information: This article does not constitute tax or legal advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice. Inheritance tax and estate planning are not regulated by the financial conduct authority.

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Benefits of setting up a trust

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Trusts have many benefits such as enabling you to pass your assets directly to your chosen beneficiaries. To start your estate planning journey, please get in touch.

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Setting up a trust

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A trust is a way to place assets in the hands of a trusted third party to hold for the benefit of others. Mark Chandler, Head of Estate Planning, explains what a trust is, when to establish one and what the benefits are.

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Types of trusts

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What is a trust?

You may want to consider putting some of your assets into a trust for a loved one. Trusts are a way of managing wealth, money, investments, land or property, for you, your family or anyone else you’d like to benefit.

Bare Trust

Bare Trusts are also known as ‘Absolute’ or ‘Fixed Interest Trusts’, and there can be subtle differences.

The settlor – the person creating the trust – makes a gift into the trust which is held for the benefit of a specified beneficiary. If the trust is for more than one beneficiary, each person’s share of the trust fund must be specified. For lump sum investments, after allowing for any available annual exemptions, the balance of the gift is a potentially exempt transfer for Inheritance Tax purposes. As long as the settlor survives for seven years from the date of the gift, it falls outside their estate.

The trust fund falls into the beneficiary’s Inheritance Tax estate from the date of the initial gift. With Loan Trusts, there isn’t any initial gift – the trust is created with a loan instead. And with Discounted

Gift plans, as long as the settlor is fully underwritten at the outset, the value of the initial gift is reduced by the value of the settlor’s retained rights.

Discretionary Trust

With a Discretionary Trust, the settlor makes a gift into trust, and the trustees hold the trust fund for a wide class of potential beneficiaries. This is known as ‘settled’ or ‘relevant’ property. For lump sum investments, the initial gift is a chargeable lifetime transfer for Inheritance Tax purposes.

It’s possible to use any available annual exemptions. If the total non-exempt amount gifted is greater than the settlor’s available ‘nil-rate band’ (NRB), there’s an immediate Inheritance Tax charge at the 20% lifetime rate – or effectively 25% if the settlor pays the tax.

Flexible Trusts with default beneficiaries

Flexible Trusts are similar to a fully Discretionary Trust, except that alongside a wide class of potential beneficiaries, there must be at least one named default beneficiary. Flexible Trusts with default beneficiaries set up in the settlor’s lifetime from 22 March 2006 onwards are treated in exactly the same way as Discretionary Trusts for Inheritance Tax purposes.

Different Inheritance Tax rules apply to older Trusts set up by 21 March 2006 that meet specified criteria and some Will Trusts. All post-21 March 2006 lifetime trusts of this type are taxed in the same way as fully Discretionary Trusts for Inheritance Tax and Capital Gains Tax purposes.

Split Trust

These trusts are often used for family protection policies with critical illness or terminal illness benefits in addition to life cover. Split Trusts can be Bare Trusts, Discretionary Trusts or Flexible Trusts with default beneficiaries. When using this type of trust, the settlor/ life assured carves out the right to receive any critical illness or terminal illness benefit from the outset, so there aren’t any gift with reservation issues.

In the event of a claim, the provider normally pays any policy benefits to the trustees, who must then pay any carved-out entitlements to the life assured and use any other proceeds to benefit the trust beneficiaries.

Property Protection Will Trust

This is a type of Life Interest Trust and is incorporated into a Will for couples who jointly own the family home.

You can protect at least half of the value of the property by having it ring fenced in a trust so you can pass it onto your children or chosen beneficiaries when you pass away, whilst at the same time protecting the surviving partner’s lifetime interest in the property.

Right of Residence Trust (ROR)

This a form of Immediate Post-Death Interest Trust incorporated into a Will. This trust allows you to give a chosen beneficiary a right to reside in a specified property either for their lifetime or for a specific time period.

Start your estate planning journey

Estate preservation and the transferring of wealth has become an important issue for many families today. We all have different objectives in life and need different strategies to help achieve them. That’s why carefully planning the financial affairs of your estate is essential to ensure that you can pass on the maximum benefit to your beneficiaries, which can have a significant impact on your loved ones’ futures.

Contact us to discuss how our Inheritance Tax planning services can help you start your estate planning journey.

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