Loss of privacy, children and the size of your estate are some of the key considerations discussed in this article.

What is an estate plan?

An estate plan differs considerably from a will. A will is quite a simple document about the distribution of your assets, and potentially instructions for the care of your children. An estate plan, however, goes much further than a will and can help heirs pay substantially less in taxes and fees. Let’s consider the three key parts of an estate plan.

Part 1 – your current circumstances

There are a number of key documents that together build a clear picture of your current circumstances. Aside from the will, some key documents within an estate plan could include:

  • A lasting power of attorney
  • A list of all assets and liabilities
  • Deeds of any trusts created
  • Life policies
  • Pension Death Benefit Nomination forms
  • Records of any gifts made

Should any of the above be required but aren’t available, you should seek advice before moving on to the next part of the estate plan. For example, if you’ve made gifts from your estate but haven’t kept a record of them, it’s important to do so – this way the executors of your estate have these details when administering your estate.

Part 2 – your objectives

Key parts of an estate plan are your objectives and preferences. They could include details of whom you wish to benefit from your estate and when you’d like this to take place – either during your lifetime and/or upon your death. With UK inheritance tax at 40%, many clients are concerned about the amount of tax their estate may have to pay. And as anyone can access information from a probate court upon death, there can be delays, fees and a loss of privacy. You may also have a favourite charity you’d like to transfer your wealth to, or philanthropic goals you wish to include.

Part 3 – implementation of the plan

Once you have an accurate record of your estate and clearly defined your objectives, the final part of an estate plan is to put it into place. You may need professional advice to help arrange your assets to maximise the legacy to your loved ones, and minimise the impact of tax, fees and loss of privacy.

Phoenix Waters Wealth Management can advise you on your options, and work with your tax adviser or legal professional to make sure the options are executed correctly. This may involve helping you invest in assets that are exempt from Inheritance Tax, creating a trust for loved ones, putting a gifting strategy in place, or simply helping to structure your wealth tax efficiently.

Keeping the plan up to date

Once the plan is in place, it’s important to keep it up to date. It’s usually sensible to review the plan annually or when there’s a significant life event, such as a birth or death in the family, a business sale or if your objectives change over time. It can also be good to seek a review of your plan when taxation rules change.

If you’d like more information on estate planning, please speak to us for a free consult and tailored plan curated for you or read more about our planning advice and services.