What is Estate Planning and why is it important at any age?

The term ‘estate’ can suggest a sprawling mansion, set within acres of land, but in reality, when related to estate planning, the term ’estate’ relates to the property of any size, cars, any assets you may own, health care directives and funeral plans. 

An estate plan will ensure that any assets or belongings you own are transferred to family members or loved ones, should you pass away. This legally binding plan will give you the peace of mind that your assets and your wishes are adhered to, and followed, should you pass away. Or, with a health care directive, that due to medical reasons, you are no longer able to speak for yourself, your wishes are followed.

What is involved in estate planning?

There are many elements and factors which can make up an estate plan. As your plan is personal to you, you may wish to include all. or just some of the following:

  • Organise and compile your account details – Within your estate plan, you should include a comprehensive list of all of your accounts and debts, with contact details and any passwords needed to access these accounts.
  • Writing a Will – Your Will is a legally binding document that lets you decide what happens to your money, property and possessions after your death. 
  • Trusts – A Trust is when one or more people look after your assets or property, for the benefit of an individual or persons, named in your Trust. 
  • Digital legacy – A digital legacy is your identity that lives on within a computer, as well as on the internet. This can include email, internet accounts, and social media platforms. Within an estate plan, you will provide access details to all of your digital accounts and social media profiles, with wishes on how you would like these accounts to be closed or managed if you were to die.
  • Charity gifts – You may wish to leave a portion of, or all of your estate, to a charity, as part of your estate plan. It is useful to know that if you gift enough of your estate to charitable causes, it may also reduce the inheritance tax payable on your estate.
  • Your family’s needs – If you have children, it is important that, within your estate plan,  you name a guardian for your children, should the worse happen, and document your wishes for your child’s care.
  • Health care directives – Health care directives incorporate Living Wills and legal instructions regarding your preferences for medical care, if you are unable to make these decisions for yourself. 
  • Funeral plans and expenses – At a difficult time, by making provisions for funeral expenses with an outline of your wishes, your loved ones will be able to swiftly make the arrangements, for your funeral, without needing to plan your funeral during their grief. 

When should you make your estate plan?

Many people assume that estate planning is for retirees or for the elderly, when in reality, estate planning is for everyone, as unfortunately, we cannot predict when illness or accidents can befall us. 

Another assumption is that estate planning is for the wealthy, when, if you own property, have any assets, or if you have children, you should make an estate plan.

In addition, if you live with a partner who is not your wife, husband or civil partner, an estate plan will ensure that they are looked after in the event of your passing. As, if you died without leaving a Will, the intestacy rules in the law would mean that your cohabitee would not receive anything from your estate.

What are the benefits of estate planning?

Peace of mind – If you have a plan for your estate in place, it will provide you with the peace of mind, which should anything happen to you, your assets will be distributed as per your wishes and that at a difficult time for your loved ones, everything is taken care of.

Inheritance tax – Having an estate plan in place can help you to reduce the amount of inheritance tax to be paid, or in some cases, an estate plan will help your family to avoid inheritance tax completely.

What might happen should you pass away without an estate plan?

People put off estate planning for many reasons. You may think that you don’t own enough, that you are too young, or that it will be costly or just confusing. We often hear people say that they will have plenty of time to do it later, or that they do not know where to begin or who can help them. The main reason though is that this is not an easy subject to consider, and people understandably just do not want to think about it. 

But, if the worst does happen, and if you don’t have an estate plan, your wishes may not be adhered to, your family could be facing difficult decisions at a time when they should be focusing on their grief and the grieving process.  With an estate plan your wishes are looked after and your family will be supported.