It is easy to believe that estate planning “is only for the wealthy.” However, most people want to ensure that their home, savings or other belongings pass to the right people in the right way and at the right time. A properly drafted Will ensures that your assets are available to benefit the people you choose and that they are protected for the future.
Below are some common traps clients fall into:
This sounds obvious, but one of the most common mistakes is to not have a Will at all. This usually has undesirable tax implications and often means that your assets will not pass to the people you want. Death does not always come when expected – none of us knows when we are going to die!
An Outdated Will
Marriage, divorce and changes in relationships mean that many people’s Wills become invalid or unenforceable without them realising or making a new Will. We advise clients to review their Will every five years to ensure that it remains appropriate.
Inheritance tax (IHT)
Many clients fail to appreciate the impact of IHT and miss out simple steps such as making life time gifts (outright or to a trust) or structuring their Will appropriately to minimise IHT. Specific opportunities exist in relation to clients with business assets. Specialist advice is always required to mitigate any tax payable. A worse mistake is deciding yourself without the benefit of advice to make gifts. For example, many clients give away their home and continue to live there, not realising that it is not only useless from an IHT tax perspective, but also creates other significant tax problems and increases the amount of tax payable overall.
Children from first marriages often get disinherited because assets have passed to a step parent first. A properly drafted will can enable you to provide for a spouse during his or her lifetime whilst still making sure that on their death your estate passes to your children and not anyone else the spouse may choose to leave it to.
Powers of Attorney
Failure to make a Power of Attorney in time means that clients will not be able to choose who handles their estate if they are unable to do so themselves. Choosing the right person for this role can have a significant impact on how assets are protected for the next generation.
Picking the wrong Executor!
It is vital that you trust your executor(s) to deal fairly, practically and cost-effectively with your estate and avoid any possible disputes which can give rise to significant delay and legal costs.
Our specialist Estate Planning Team ensures that our clients deal with all of the above issues in good time and minimise the overall cost of IHT and legal fees relating to death and the transfer of assets to next generations.