Life After Death: The Importance of Estate Planning
The term “Estate Planning” simply refers to the process of making a Will as well as reviewing your other affairs. Whether you are single, married, or have children, you ought to make sure your surviving spouse, partner, friends or children are provided for as you see fit.
In this blog, we’re going to give you several reasons why estate planning is important to ensure your loved ones are taken care of, and so you can avoid potentially disappointing and unexpected consequences.
1. Declare Who Gets What
If you fail to prepare a Will, the “intestacy” rules will decide how your estate is distributed. This includes non-financial assets for which you might consider important, such as that classic car or bike, or the piece of jewellery that your granddaughter has always loved. By creating an estate plan, you are ensuring that your assets will be distributed exactly as you wish.
2. Eliminate Family Spats When You're Gone
We’ve all heard those horror stories where families end up fighting over assets when a loved one dies. This squabbling can get ugly and end up in court, with family members pitted against each other for months, and sometimes years. It's yet another reason why an estate plan is necessary. An estate plan will enable you to choose who controls your finances and assets if you become mentally incapacitated or after you die, and it will go a long way towards quelling any family strife and ensuring that your assets are handled in the way that you intend them to be.
3. Restrict Access to Children’s Inheritance
If you have young family members who have a poor sense of judgment when it comes to making financial decisions, you may want to leave your assets to them in trust rather than outright.
You can specify another family member to act as trustee, to ensure the assets will be used for the child’s best interests and will not be wasted on frivolous expenditures. You can also specify that the child will take over as trustee upon reaching a certain age, such as 21 or 30 for example.
4. Plan Your Funeral
If you are worried that arguments over your funeral service will cause disputes within your family, you may wish to consider incorporating your funeral plan into an estate plan. This would involve specifying the person you want to put in charge of your funeral within the Will itself. For example, in your Will you can state whether you would prefer to be buried or cremated, and the type of funeral service and music you would like.
5. Give Yourself Peace of Mind
Following the two previous points, creating a comprehensive estate plan to deal with your assets and provide for your loved ones after your death is one of the most rewarding tasks you can undertake. You will feel an enormous sense of accomplishment when you complete your estate plan knowing your loved ones will be taken care of exactly how you intended.
If you die without making a Will (also known as ‘intestate’) arranging your assets and affairs will become very complicated for your family. Intestacy rules are incredibly complex. If a suitable beneficiary is not found the government may be entitled to seize the full amount of your assets upon your death. Several factors can come into play – including your marital status, whereabouts you live in the UK and the value of your estate.
An estate plan is therefore essential if you have clear wishes on how your assets are distributed after you pass away. You can leave property, money and personal items to named beneficiaries. However, it’s important to bear in mind that without proper estate planning your relatives and assets may still be affected by inheritance tax. You can also leave gifts to charity in your Will if you have a cause or causes you wish to support.
An important consideration to remember about estate planning is that once you have an estate plan, it should be reviewed at least periodically. Estate planning can be ever changing. For example, assets can increase or decrease in value, there may be a birth of a new family member, or divorce may alter the family dynamic. Whatever your situation, talk to our estate administration experts, Victoria Norman and Sarah Inman today on 01724 854000, or pop in for a friendly chat.
This is just a very brief overview of some basic ideas of estate planning and should not be relied upon as legal, financial, or tax advice.