If you own any assets, you should have a Will.
As soon as you got married, one of your family members took you aside and asked if you had made a Will yet. Maybe they even palmed a dogeared business card into your hand, insisting that you call their friend Charlie to get it all sorted.
When you came home with a big promotion and called your mum to tell her the good news, she told you she was proud of you…and then she asked you if you had made your Will yet.
You have been hearing it since you bought your house, had your first kid, maybe even after you got your first pet on your own…”Do you have a Will yet?”
If you do, that is fantastic.
Do you have an Estate Plan?
You might be confused about the difference between a Will and an Estate Plan.
In basic terms, a Will is about WHO; an Estate Plan is about the HOW.
The Will tells the courts who will inherit what, the Estate Plan tells the courts how and when.
For example:
Guardians for children are named in the Will. That gives us the who.
A Children’s Will Trust allows guardians to access money set aside to benefit those children for specific uses (school uniforms, trips, etc). That is the HOW. Access is granted to those funds through the Children’s Will Trust.
Another example:
You want to leave your biggest asset, your home, to your children.
You can establish a Family Protection Trust before you die to make sure that the value of that asset isn’t destroyed by poor decisions made by the “maverick”. (You know which one we are talking about.)
What Can You Do With an Estate Plan That You Can’t Do With a Will?
Protection from Probate Nightmares with Estate Planning
Probate is the evaluation of the deceased person’s assets, paying any taxes assessed, settling up bills, and THEN distributing to the beneficiaries named in the Will.
But if the beneficiaries named in the Will are minors? That means trusts, guardianships, lawyers’ fees, court dates, professional opinions, etc. That all costs money that your beneficiaries don’t have access to (catch-22).
You might think that you are leaving so little behind that it isn’t worth the trouble…but probate is required for all estates with a value of over £5k.
This is part of what Estate Planning resolves before you are even a twinkle in death’s eye.
Probate is hell. Spare your loved ones. Do an Estate Plan.
Significantly Reduce Inheritance Taxes with Effective Estate Planning
Estate taxes really do take a chunk. As of this writing, (July 2021), the inheritance tax rate is 40% above threshold.
With just basic careful estate planning, you can significantly reduce the amount of inheritance that can be taxed.
Protect your biggest asset from being eaten up by inheritance taxes and leave your beneficiaries a boon instead of a tax bill.
Protect Beneficiaries with Strategic Estate Planning
When deciding to leave money to a beneficiary, especially a minor beneficiary, a Trust can not only protect the inheritance from taxation, but also protect the beneficiaries from poor decision making.
Minors cannot inherit until they are 18. That means that the funds need a trustee to look after that sum of money until the beneficiary comes of age. If you don’t nominate a trustee and establish a trust, that money could be inaccessible to the child’s guardians. If you don’t create a plan yourself, that money could end up being cared for by a court-nominated trustee. No, thank you.
You can protect adult beneficiaries from having their inheritance squandered on bad decisions, as well. A property executed Estate Plan can prevent their inheritance from being spent on a gambling habit or from getting lost in a divorce you can see coming a mile away.
Estate Planning – Think Of It As Cleaning Up Before You Check Out
Estate Planning is not just about what happens after you die.
It’s also about what happens if you are not able to make financial and medical decisions for yourself.
It’s about keeping the peace between friends and family by being explicit about how you want the future to unfold.
It’s about avoiding expensive probate and deputyship hearings where everyone loses. Your survivors lose time they could have spent with you, and money getting your affairs sorted.
What’s in an effective Estate Plan?
Great! You’re in. You know you need a good Estate Plan. But what goes into one?
Will – This is the WHO gets WHAT document. Guardians are named, executors are nominated, and beneficiaries are named. It is also where an Executor is named (the person who is going to make sure that everything is distributed appropriately). Check out this handy Will planning checklist if you are still figuring this part out.
This is where a lot of people stop with their planning. Without consulting with a professional, it’s hard to know if this is enough for you or if you need to do more work.
Usually if you own property, a pension, and have kids…a Will isn’t enough.
Will Trusts – These are like the load bearing support beams of the Will. The Will does the naming of names. The Will Trusts give the details of when, where, and who is in charge of making sure the directives of the Will Trusts are followed through. The Will Trusts are what help your family and beneficiaries avoid conflict and protect your assets from being disbursed in a way that you did not intend.
Lasting Powers of Attorney – Know who is going to be in charge when you cannot be. Life happens. Either time, illness, or an accident could very well incapacitate you at some point. When you have Lasting Powers of Attorney in place, you can rest easy knowing that the person you trust most with your finances or your medical decisions has the legal ability to help you when you cannot help yourself. You can nominate a team or one person. It is all up to you, as long as you establish your LPA while you have capacity.
Advanced Decision – If you have an adverse opinion about potential medical treatments or life saving intervention, this is where you can make your opinion known, and have it stick. For example, you can state that if you lapse into a coma for longer than 3 months, you want to be taken off life support. It won’t stop a doctor from trying to save your life in an A&E, but it can be used to prevent a mechanically prolonged life that you don’t want.
Beneficiary Designations – If you have named beneficiaries in your Will, fantastic. Do they match what you have on your pensions, bank accounts, investments? Making sure these are matchy-matchy is how you can prevent family fractures from happening. Without making sure that there is a match, you don’t have an effective Estate Plan.
Can it get more complicated? SURE!
Does it need to be? We don’t know, because we haven’t spoken about your specific circumstances.
If you want to be sure that your Estate Plan is rock solid, give us a bell.
Have questions? At Olive Tree Law, we have answers.
Just ask to speak with Chris or Robynne.
