When we explore legacy with our clients, they not only tell us about their hopes and aspirations for their future, but also about being able to leave lasting legacy for their future generations too.
Both a will and an estate plan can ensure that the assets you’ve built up throughout your lifetime will go to the people you want them to when you’re no longer around. While they have a lot of similarities, they are two very different processes and it’s important to understand their differences.
Will planning can be a straightforward process and involves creating a last will and testament as well as appointing an executor. Your executor is the person you choose to be responsible for ensuring that all instructions in your will are followed. This legally binding document dictates who will manage your affairs and inherit your assets after you pass away. It can include:
- Who should look after your children
- Who will receive your assets (such as cash in the bank, property, savings, investments and any other assets. eg. jewellery and art)
- Who will take over your business, if you have one
It’s very important to create a will if you have a spouse, any children and/or any assets. Doing so will prevent any disputes between family members and ensures that your loved ones will avoid court action in order to acquire your assets.
Estate planning includes your last will and testament but is far more comprehensive. There are several other documents to consider when planning your estate:
A healthcare directive and living will
This details your end-of-life preferences and the designated individual that will make health decisions for you, if you are unable to. It can include details such as whether you want to be resuscitated or not and end-of-life care. A living will can help your family make difficult decisions during an already emotional time.
Financial power of attorney
This will designate someone to make financial and legacy related decisions on your behalf, if you are unable to. A financial power of attorney will help to protect your assets and keep your family financially stable
These documents are a lot more in-depth than your will and can provide additional protection to your most important assets. They explain who should receive money from life insurance policies, retirement accounts and any other savings you may have.
A trust allows you to manage any assets you may have such as savings, investments and property. They can also be set up in variety of situations including:
- When someone is too young to handle their own affairs
- To help reduce Inheritance Tax
- To pass on assets when someone is alive or following their death.
Including this in your estate plan ensures that beneficiaries do receive what they’re entitled to.
Secure your legacy
When used together, a will and an estate plan are incredibly strong tools to protect your assets and the people you love the most. Make sure you secure your future legacy by following the steps below.
Get your affairs in order
First and foremost, organise your will, healthcare directive and power of attorney at the earliest opportunity. In addition to getting these documents ‘in order’ it’s recommended that, to be even more prepared, you should thoroughly consider your other estate items such as: real estate, insurance and other ownership papers; documentation of funeral wishes; and documentation of financial accounts and passwords. Ensuring your affairs are in sufficient order at the time of passing, will mean your family can manage your estate in an organised and suitable manner.
Advise your family and friends.
Although discussing your death may be a difficult topic, you should begin to initiate conversations with your loved ones on your end-of-life and legacy matters. This will mean you have people who understand your wishes at the time of your death and can guarantee that they are fulfilled.
Seek professional advice
You should seek advice from trusted financial, legal and medical professionals. Talk to a financial adviser (particularly if your estate is substantial) to help set out the steps you need to take. Not only will they be able to advise on issues such as inheritance tax and asset preservation, but they can assist with ensuring your financial accounts are titled correctly and that any beneficiary designations are up to date.
Review and update
You should aim to review your documents at five year intervals. However, should your circumstances change any time, your documents should also be modified. This includes any;
- major life events (eg. getting married/divorced, having a child, death of a spouse, expatriation or retirement)
- changes in assets (eg. purchase or sale of property, receipt of inheritance, rolling over retirement accounts)
- relationship changes with your appointed executor of estate, healthcare representative or power of attorney
- external changes to taxes or laws which may affect you (eg. gift, inheritance and estate tax)
If you would like further information about safeguarding both your and your family’s future, please don’t hesitate to get in touch and we’ll be happy to help.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
Will writing, Powers of Attorney and Trusts involve the referral to a service that is separate and distinct to those offered by St. James’s Place. Wills and Powers of Attorney are not regulated by the Financial Conduct Authority.