Let’s face facts; the reason why most of us work is to earn money and enjoy life, with the income derived from labour capable of building wealth and creating a viable estate that can sustain you in your retirement.
Of course, the value of your state may also remain long after you’ve passed, and you may be motivated to optimise this so that you can leave as much money as possible to your loved ones.But what steps can you take to safeguard your estate and its long-term integrity (especially after you’ve passed)? Here are some ideas to keep in mind.
Start by Creating a Will
Your last will and testament is a legally binding document that outlines how you want your estate and its individual assets to be distributed in the event of your death.
By creating a will, you can ensure two things. Firstly, your wishes can be carried out in full and without deviation, ensuring that your hard work ultimately achieves everything that you have ever wanted.
Secondly, creating an official will prevent inheritance disputes, which can be highly emotive and cause significant conflict between already grieving families. If you need help writing a will, speak to a legal expert who can provide impartial advice and create a document that’s concise and best represents your wishes.
Consider Your Executor
Creating a will also requires you to appoint one or more executors, who will be tasked with managing your estate and fulfilling your wishes in the wake of your death.
This should ideally be a family member and somebody that you trust, while they should also be willing to take on this responsibility and handle this in a mature and impartial manner.Your choice is important, as selecting the wrong executor can also lead to conflict and disputes between warring family members. Similarly, people may believe that an executor isn’t carrying out their duties adequately, creating a scenario where they seek out legal advice and challenge you.
Create an Estate Plan
Once your plans have been put in place, you can begin to focus on creating an estate plan that optimises the value of your estate.
One way to do this is to arrange the transfer of assets to minimise the risk of taxation. This process is referred to as ‘gifting’, which requires you to transfer assets to beneficiaries up to seven years before your death.
Inheritance tax (IHT) is charged at 40% on estates with a value of £325,000 or above, so minimising its value in a legal and compliant way can optimise how much your beneficiaries ultimately receive.Your estate plan, which can also be created and adjusted in line with an expert, should also focus on reducing administrative costs and ensuring the distribution of assets in line with your precise wishes.
Review and Maintain Your Plans
As you continue to age, you’ll need to ensure that you keep an accurate record of your assets and liabilities, and ensure that this information is reflected in your will.
Similarly, you may find that your plans change in line with significant life events and circumstances, such as births (of grandchildren), marriages and bereavement.
In this case, you may need to change your plans and the future allocation of your assets, requiring you to update your will and estate plan.Just try to be organised and proactive in such instances, and don’t be afraid to speak to an independent advisor if you’re unsure of any changes in particular.