Planning what happens after our death is often the one task that we “put off for another day’. Unfortunately, things can happen and that ‘another day’ may never come. If this situation becomes a reality and you have not planned your estate sufficiently, it inevitably is left to your family to sort. This can be a difficult, time consuming and expensive task, particularly if you have signifiant wealth.
This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice.
Advantages of estate planning
Whilst, it may not be enjoyable to think about our own death, planning what will happen to your estate, whilst you are still around, will make it much easier for your loved ones when you are gone.
Planning your estate allows you to:
- State who you want to leave your belongings to, and
- When these people can receive it – if you are leaving money or valuable assets to children, you may not want them to have access to it until they reach a specific age.
If you don’t specify who you want your estate to be left to in a will, your estate will be ‘intestacy’ and the assets will be shared out according to the law, which is not necessarily who you want to receive it.
For instance, if you have children or grandchildren, how much they can legally get will depend on where they live in the UK. By making a will though you can decide this yourself.
Taxes can be taxing
There are several financial factors to take into consideration with estate planning, the main being Inheritance Tax (IHT).
Key points to know about Inheritance Tax
- Inheritance Tax is transferable between spouses and civil partners (if domiciled in the UK)
- If the spouse or civil partner does not use their full nil band at death it is transferable. This means a couple can have a combined nil rate band of £650,000 (£325,000 x 2)
- Main residence nil rate band was introduced in April 2017 – this means that the first £100,000 of the home’s value is exempt from Inheritance Tax – if it is left to a direct descendant (e.g. child, step-child)
- The main residence nil rate band will increase by £25,000 each year until 20/21 when it reaches £175,000
Regularly revisit your plan
We recommend that you discuss your plans with a financial advisor and that you do it as soon as you feasibly can.
Once, it is in place, it is advisable to regularly revisit it, as your financial situation can change and tax changes can come into force, which can have an impact on your current arrangements.
For IHT and estate planning, speak to Darren
Dental & Medical Financial Services have been helping doctors and dentists with IHT and estate planning for over 25 years. Call to discuss your situation with Darren:
Tel: 01403 780 770