Wills & Probate page

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:

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Why do I need a Lasting Power of Attorney?

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It is critical to consider the potential consequences of not having a Lasting Power of Attorney (LPA) in place. Many people assume that their loved ones or close relatives will automatically have the authority to make decisions on their behalf. However, this is not the case, and without an LPA, those close to you will not have the legal authority to handle your financial affairs, health decisions and welfare.

Setting up an LPA is vital to ensure that you have a trusted individual who can manage your affairs when you are no longer able to do so yourself. It is essential to think about these scenarios in advance and plan accordingly by setting up an LPA. This legal document will ensure that your wishes are respected and carried out, regardless of your capacity to make sound decisions.

What is an LPA?

Despite the fact that 95% of UK adults are aware of LPAs, a recent study has revealed that only one in three (33%) actually know how to use it effectively, leaving a considerable proportion at risk of costly and time-consuming measures if they were to lose their spouse [1].

An LPA is a legal document that enables you to delegate decision-making authority to one or more trusted individuals to manage your financial matters, property affairs, health and welfare. You can set up an LPA at any time, provided you meet the age requirement of 18 years and have the mental capacity to make sound decisions.

LPA benefits

There are several benefits to having an LPA, including assistance in temporary situations such as hospitalisation or travel abroad, where you may need help with daily tasks like paying bills. It is also beneficial in long-term situations where you want to plan for the unexpected or have been diagnosed with an illness like dementia that may affect your decision-making abilities in the future.

According to the research, although three-quarters (74%) of Britons deem an LPA necessary, only 37% of them have actually put it in place. In contrast, around three-quarters (76%) of people in relationships have discussed Wills and Trusts with their spouse.

Same-sex married couples

The research also highlighted that less than half (41%) of married couples have enacted LPA, and a quarter (24%) have no plans for doing so, which suggests that many couples view this measure as unnecessary, and often mistakenly believe that LPA is automatically granted to married couples.

Notably, this issue disproportionately affects same-sex married couples, where awareness of the importance of LPA is higher than the population average (87% compared to 76%), but uptake is lower (30% compared to 41%).

Estate Planning Services

Do you need advice and expertise on every aspect of your estate? We understand the importance of putting the right planning in place for the future. We’ll help you organise your affairs and plan for the future. To find out more, speak to us today.

Source data: [1] https://adviser.scottishwidows.co.uk/assets/literature/docs/2023-03-power-of-attorney.pdf

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. Powers of attorney/will writing and trusts are not regulated by the financial conduct authority.

Talking about inheritance

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Time to talk: Have you talked about your Will?

  • 57% of parents haven’t spoken to their adult children about their Will
  • 24% of adults haven’t discussed making a Will with their partner or spouse
  • 49% of adults admit talking long-term finances with family is difficult
  • of parents feel responsible for their children’s financial wellbeing if they were to pass

If you would like to speak to one of our Estate Planning Specialists on making a Will, then please get in touch.

Writing a Will

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Statistics show that 22% of adults aged 75 years and above have no will, along with 39% aged between 65 and 74.

Having a Will in place is essential to ensure your estate is passed down to who you want it to. If you would like more information and guidance on making a Will, please get in touch.

Wills and Inheritance Tax

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Wealth transfer has become an important issue for many families today. Individuals with assets of any size should prepare for their eventual transfer whilst making provision for any tax or legal consequences.

But more than half of parents (57%) haven’t spoken to their adult children about their Will, according to new research[1]. Nearly a quarter (24%) of adults haven’t discussed making a Will with their partner or spouse, while almost a third (31%) were unsure if they understood the long-term benefits of putting their assets into a trust or finalising a Will.

Long-term finances

The survey also revealed one in two (49%) adults admit that talking about long-term finances, especially in the event of death, with family members is difficult. When it comes to discussing Wills and trusts with adult children or dependents, over two-thirds (69%) of parents say they feel responsible for the financial wellbeing of their children if they were to pass away.

Despite this, 57% admitted they haven’t talked to their children about long-term finances, while nearly one in ten (9%) parents said they weren’t sure how to approach the topic. The survey finds 47% of people have their children down as a beneficiary of their Will – higher than other forms of support, such as a deposit for a house or flat (19%), a savings pot with regular contributions (16%), or covering the cost of transport, such as a car (15%).

Minimal Inheritance Tax

Parents and guardians should make formal arrangements so that, upon their death, the appropriate plans are in place to ensure the people they wish to benefit from their estate will do so, with the estate settled as quickly as possible and with minimal Inheritance Tax.

If there is no Will, the deceased’s estate will be distributed under the terms of law, which may not align with their loved one’s wishes. Receiving the right professional advice and setting up a financial plan can ensure you are best able to look after your family when the time comes.

Giving peace of mind

With so many different options, it can be overwhelming. The research found that two-thirds of adults (69%) understand the long-term benefits of finalising trusts and Wills, but that still leaves many who don’t.

It’s important to have plans in place to protect your assets and loved ones, today and in the future. It might be difficult to think about, but it ensures your wishes will be met, giving you peace of mind. The outcome of not having a Will or trust in place can be costly – so knowing the difference between Wills and trusts, and putting them in place appropriately, can provide vital benefits.

Wealth and assets

When looking to leave assets to family members, Inheritance Tax is a key consideration. Effective estate planning can help in ensuring your wealth and assets go to your loved ones. By setting up a trust you can effectively put the money outside of your estate, which could be efficient for Inheritance Tax purposes.

Assets held within a trust do not usually form part of your estate upon death, provided that you live for seven years after placing the assets into trust. Therefore, it’s likely they won’t be liable to Inheritance Tax.

Understanding the options

Effective estate preservation planning could save a family a potential Inheritance Tax bill amounting to hundreds of thousands of pounds. Inheritance Tax planning has become more important than ever, following the government’s decision to freeze the £325,000 lifetime exemption until April 2028, with inflation eroding its value every year and subjecting more families to Inheritance Tax.

Over half of Britons (57%) believe it’s important to seek financial advice when it comes to long-term financial planning, which is absolutely right. Seeking advice from a professional ensures you fully understand the options available, and recommendations are made in line with your requirements, giving you peace of mind.

Inheritance tax planning services

Are you looking to pass on more of your wealth in the most tax-efficient way? We all have different objectives in life and need different strategies to help achieve them. We can help you build a strategy that provides financial support to your family and helps you pass on more of your wealth in the most tax-efficient way – please get in touch with us for more information on our estate planning and inheritance tax planning services.

Source data: [1] The research was conducted by Opinium Research and surveyed 2,000 UK adults between September 5-13, 2022.

Important Information: Inheritance Tax planning is a highly complex area of financial planning. Information provided and any opinions expressed are for general guidance only and not personal to your circumstances, nor are intended to provide specific advice. Professional financial advice should be obtained before taking any action. Inheritance Tax planning is a highly complex area of financial planning. The financial conduct authority does not regulate Inheritance Tax planning.

Property Protection Trusts

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You can establish a trust during your lifetime 0r; through your will, on your death. You can appoint trustees of your choice (this can include you and your spouse during your lifetimes) who will manage the trust on your behalf. Following your death, the trustees will act with consideration to your wishes.

Trusts offer several benefits:

  • On your death, the trust asset can pass to your chosen beneficiaries with no need for probate
  • In certain circumstances, trusts can protect your assets from creditors
  • You can control who benefits from your assets during your lifetime and on your death
  • Depending on how the trust is structured, it is possible to invest your assets into a trust to mitigate inheritance tax, income tax, and capital gains tax (principle private residence relief)
  • Protect your estate against potential future care fees

You may also wish to reserve some influence over your assets for the trustees to observe after your death.

For example:

  • You may want to delay the age at which beneficiaries inherit
  • You may want your heirs to receive their inheritance in stages
  • You may be concerned about your heirs getting divorced and want to protect the assets inherited from you being included in a divorce settlement

Trusts can also be useful in preventing assets reaching a beneficiary facing insolvency proceedings and those making poor lifestyle choices, such as involvement in alcohol and drugs.

Property Protection Trust

Owning your home as tenants in common rather than joint tenants provide additional planning opportunities. This can potentially protect inheritance in terms of residential care fee assessment and marriage following bereavement.

A property protection trust is put in place so that the half share of the family home belonging to the first person to die passes into the trust (also known as a life interest trust). This allows the surviving spouse to benefit from the share of the house during their lifetime. Following the surviving spouse’s death, the property can then be passed on to either children or loved ones. By putting this trust in place, you are ensuring your assets are going exactly where you want them to go and giving you total peace of mind.

The benefits of a property protection trust are:

  • Each spouse now owns 50% of the property
  • Each spouse grants the surviving spouse a ‘right to reside’
  • Allows you to pass your property to your chosen beneficiaries
  • Each spouse can gift their 50% as they see fit: (both halves of the property do not have to go to the same beneficiaries)
  • Allows you to nominate your chosen Executo1·s/ Trustees to handle the property on your behalf
  • Can be used as a tool for planning for care home fees

Please be aware that should the survivor remarry, not make a new will and then die, intestacy rules would see the new spouse taking a disproportionate amount of the estate. By severing the tenancy and creating a life interest trust in your wills (for the surviving spouse), this means your assets are going exactly where you want them to go and giving you total peace of mind. To preserve the residential nil rate band, property needs to pass to direct descendants.

Get in touch

For more guidance on the benefits of setting up a property protection trust and for more information on our inheritance tax planning services, please get in touch with us.

Checklist for Protecting your Family’s Finances

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Checklist for Protecting your Family’s Finances

Create an estate plan

Estate planning isn’t only for the wealthy. There are various ways you can minimise Inheritance Tax like gifting or utilising pensions and trusts.

Protect against illness and death

We can help select the right products for you and your family’s needs.

Write or review your Will

Ensure your money and assets go to the people and causes you care about.

Get in touch

For more information on our inheritance tax planning services, please get in touch.

Inheritance Tax Planning Services

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Head of Estate Planning and Chartered Financial Planner, Mark Chandler, outlines our tax planning services and inheritance tax planning services including making a Will, trusts and probate.

Financial Protection

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Financial Protection

No ‘one-size-fits-all’ protection solution

Everyone should review their financial protection and estate plans. A solid plan will help you feel confident your family’s finances are secure.

The uncertainty of the past couple of years has shown how important it is to have a robust plan in place for securing your family’s finances. While no one knows what is around the corner, reviewing your protection, updating your Will and creating an estate plan will help you rest assured that the financial side of things is taken care of.

These are some of the main considerations:

Protect against illness and death

It is essential to make sure that you have adequate protection in place, depending on your particular circumstance. There is no ‘one-size-fits-all’ protection solution so receiving professional advice is important when considering the right products for you and your family’s needs. This will ensure that your finances remain secure if illness or death happens unexpectedly, giving peace of mind to you and your loved ones at what could otherwise be a difficult time.

A life insurance policy is one of the most important types of protection to have in place. It pays out a lump sum if you die during the duration of the policy, helping your family to pay o% their debts, maintain their lifestyle or cover any other expenses they may have.

Critical illness cover can also provide valuable financial protection in case you are diagnosed with a specified serious illness while your policy is active. This type of cover will pay out a tax-free lump sum if you are diagnosed with an eligible condition, allowing you to concentrate on getting better without having to worry about bills piling up.

Income protection is also worth considering when developing your financial plan. This type of cover provides regular payments should you become ill or injured and are unable to work. This can help you cover your regular outgoings, such as mortgage payments or rent, while you recover.

Write or review your Will

Writing or reviewing your Will is essential for making sure that your wishes are respected and carried out after you pass away. It ensures that your money and other assets go to the people and causes you care about, such as relatives, family friends, charitable organisations, etc. Additionally, it provides you with the opportunity to appoint guardians for any children in your life, so they can be looked after by people you
know and trust.

If you don’t have a Will in place when death occurs, then the rules of intestacy will be applied to distribute your assets and possessions according to legal guidelines. These might not always align with what you would have wanted. Therefore, it is important to obtain professional advice on how best to proceed with making a professional Will. Doing so can help to ensure that your wishes are appropriately recorded and respected, even after you’ve gone. With the right professional advice and guidance, making a Will or reviewing your Will provides peace of mind that comes with having your affairs in order.

Create an estate plan

Creating an estate plan is a step that can make a significant impact on the financial futures of your children and grandchildren. Despite common misconceptions, estate planning isn’t only for the wealthy. In fact, due to rising house prices and the freezing of the Inheritance Tax (IHT) nil-rate band until April 2028, IHT could now be more impactful than before.

Fortunately, there are various ways in which you can minimise this unexpected burden, ranging from making lifetime gifts to utilising pensions and trusts. To get the most out of these options, it’s best to seek professional financial advice. We can help guide you as you build a comprehensive estate plan tailored specifically to your needs, to ensure that your family is well-protected and their financial futures are secured.

Being prepared for whatever the future may bring

In uncertain times, receiving professional advice can help you feel confident you’re doing everything you can to secure your family’s
finances. We will look at your personal, family and financial circumstances to recommend the right solutions for your individual needs. You can focus on enjoying life today, safe in the knowledge that you’re prepared for whatever the future may bring. To find out more about our financial planning services or inheritance tax planning services, please contact us.

Inheritance Tax Planning Services

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Head of Estate Planning, Mark Chandler, discusses the services that Ellis Bates offer around Inheritance Tax planning services and making a Will.

For more information, please get in touch.

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