20+ Estate Planning Tips and Traps

Every situation is different, and there is no substitute for regular reviews of your situation to take into account personal and family changes, as well as changes in Taxation and the Law. We recommend joining Will Custodians Peace of Mind Service, a low-cost service to help you stay up to date.

So let’s get to the Estate Planning Tips:

  1. The one above – regular review is the single most important tip! Many existing Wills, correct at the time, will now create an uncessary tax charge of up to £140,000. For a few pounds a year, you can get secure storage, free advice, and on top of that, substantial discounts on new work or amendments.
  2. Marriage invalidates a Will which was not made clearly and specifically with that marriage in mind. I am chasing a client at the moment who is getting married next week and should have signed various documents by now or some of them (the prenup) will be less effective!
  3. Divorce, after the final step in the divorce is the pronouncement of the Decree Absolute which will be made on the court receiving the Notice of Application for Decree Nisi to be made Absolute. Once the Decree Absolute has been granted, you will be legally divorced and any mention of the ex-spouse will effectively be deleted in your Will. But many people forget to ask for the Decree Absolute to be granted sometime for years. So if divorce is on the way, change your Will NOW, just in case. And make sure to apply for the Decree Absolute at the earliest possible moment.
  4. If beneficiaries change their names, or addresses, it is not usually an issue BUT
  5. Should a beneficiary change sex, then they are technically no longer the person mentioned in your Will, so it is safest to update it.
  6. If your Will names indvidual children or grandchildren, then you may need to change it every timne a new one is born – more dosh for the lawyers, but something we try to avoid when possible by using the “class” of children or grandchildren in equal shares. Doesn’t suit everyone of course.
  7. Commonly called Property Trust Wills, these are ideal for blended families where each of the couple may want to ensure a fair distribution of property assets on the death of the second partner, so both partners children benefit from their parents estate, rather than the standard situation where the kids of the last to die get the lot.
  8. Full Property Trusts are often used specifically to protect against Care Fees, and they are challengeable as deliberate deprivation. But their are many excellent reasons for having them, and every business person should certaibnly consider their protection.
  9. The cornerstone of Legal Planning is actually Lasting Powers of Attorney: Wills are important of course. Once you are 18, the only person able to make decisions about you and your affairs is YOU – accidents or strokes can take that ability away, and leave you in the well meaning clutches of Social Services and the Court of Protection, not your wife or children.
  10. Having papers in good order helps massivley when people die – a simple folder with latest statements form savings, investments, insurances, car log books, details of where your Will etc are (Peace of Mind Service?) It doesn’t take long and is easy once you get in the habit. I use polythene pockets in mine.
  11. If you are not sure but you may have mislaid paperwork, it is worth trying a search at the Unclaimed Assets Register.
  12. Digital and online assets are something of a nightmare, but at least include a list of them in your folder, but the security of passwords and access codes is a real issue – if anyone has any suggestions let me know. With Bitcoin etc, the loss of log in details can be very expensive!
  13. A surprising number of people don’t get around to signing their Wills, so they are invalid! A Will must be signed in front of two INDEPENDENT WITNESSES who then sign in turn and add names and address whilst all three are stil together. There are variations, but that is the safest way, with identificable witnessin the event of a dispute.
  14. Lasting Powers of Attorney decide who can manage a) your finances and b) welfare matters – where you live, who you see, medical issues. You have to have “mental capacity” to make them. Should you not have them in place and their is an accident, stroke etc, you will effectively become a ward of the Court of Protection and the judges there, not your family, will decide the shape of your life at substanial cost, which you will pay.
  15. Business Assets – many businesses die with the owner, or even if the owner becomes ill. Sound estate planning can often help the business to survive to the benefit of those left behind – and any staff!
  16. Overseas Assets bring complications, none more annoying that shares bought in the UK of “British” companies which turn out to be American which brings in a whole layer of extra work and delay. A point to check with your broker, and maybe invest abroad through a UK fund??
  17. Tax and Lifetime Gifts: the current allowances for one off gifts are pretty low at £250 to as many people as you like, and up to £3,000 as a seaparet gift – but not the same people.
  18. But there is a massive opportunity for those who live well within their income as “Gifts out of normal expenditure” made on a regular basis can be exempt, and enable wealthy people to give away very large amounts of money with no Inheritance Tax Liability.
  19. There are also allowances for gifts towards weddings – but these must be made BEFORE the wedding, and like all gifts, the date they are counted is the date they appear in the receivers bank accounts (cash last minute works too!) These gifts are rulary exceeded as the maximum is £5,000 for a child, £3,000 got as grandchild or great grandchild, and £1,000 for anyone else.
  20. Business Assets and Inheritance Tax – many business assets – which may include investments – will be exempt from IHT after a couple of years – we can’t give specialist advice here!
  21. After a death, or before an imminent death, you may find some useful information at the Probate Department (brokers) site.
  22. When you die, your original Will needs to be easily found. Will Custodians Peace of Mind Services makes that as easy as possible, and also registers your Will on the National Will Register to be on the safe side.
  23. When storing your Will, bear in mind that it has to be easily accessible but only to your executors. Too many Wills are found (and sometimes destroyed) by disappointed beneficiaries (or their partners). Others are in vaults which no one is allowed to access without a Grant of Probate – chicken and egg!

If you have any questions, please feel free to contact us, though we can only give generic advice to non-clients.

Call Us on 01323 741200