Bloodline planning may sound a little feudal, but it's an important part of estate planning if you want to leave any sort of legacy for your immediate family.
So, in the second of our new series "Top Questions About…" we look at bloodline planning: what it is, how to do it, and why you should do it. .
What is bloodline planning?
Bloodline planning is a series of measures you put in place to make sure family assets that you want to stay in the family, stay in the family. You can protect individual assets and secure them for the loved ones in your life who you want to inherit.
For more details, see our earlier blog.
What are the benefits of bloodline planning?
Bloodline planning is a method of excluding anyone you do not want to benefit from accessing your assets, even after your death. By nailing down who gets what and ring-fencing these assets in a Trust, you can protect inheritances against future life events.
So, if one of your children gets divorced, you can ensure that none of their inheritance can be claimed by their ex-spouses, or by creditors if they get into debt.
What is a bloodline planning Trust?
There isn't a specific "Bloodline Trust", as all Trusts have a similar goal; to ring-fence assets. There are various types of Trusts, which are administered by your appointed trustees. Trustees are responsible for:
- Carrying out your wishes as the settlor (the person making the trust)
- Looking after the needs of the beneficiaries of the Trust
Most Trusts are set up via a Will and only come into effect on your death. A Trust can potentially reduce the inheritance tax bill for your beneficiary's estate as assets held in a Trust are not accounted for as part of your estate and therefore will not be added to theirs. So they can be tax efficient too.
Do I need to find a solicitor to set up a Trust?
No. As part of your overall estate planning, we can advise you on the various types of Trusts, and discuss which may be best suited to your needs.
We work with specialist trust companies that draft the actual Trust document to ensure they are legal and binding.
Trusts can be complex, and not all types of Trust will be suitable for your estate. So always consult a professional estate planner like Paul before making any decision.
How will bloodline planning help my family?
Bloodline planning is your gift to the next generation, to ensure that they are provided for whatever the future holds. Bloodline planning starts with asking yourself key financial questions, such as:
- How much would be required to keep your partner/spouse financially secure now and into their old age, including potential long term care costs?
- Which of your children are already financially secure, and which might need financial help in the future?
- Which of your children are married, and which of them might not remain so…?
Is bloodline planning all about the money?
Not at all. Bloodline planning can be used to protect any type of asset, including:
- Property and land
- Shares and investments
- Family heirlooms and antiques
Including these items in your Will as part of your bloodline planning can make sure that precious family items go to those who will treasure them. As we said in a previous blog:
"The most effective way to ensure precious objects pass on to the right person is to specify who gets what in your Will. This helps you ensure that the person who receives a specific object or item will be the best person to look after it (and not leave it to get woodworm in their garage…)."
Does making a Will replace bloodline planning?
No, because writing your Will is an essential part of bloodline planning. Your Will becomes part of your overall estate planning that also includes any Trusts. To really make your wishes clear, and avoid any potential disputes, you can add a Will clarity statement.
Can I change my bloodline planning or is it fixed?
You can, and should, update your bloodline plans as circumstances change in your family. Your life and the lives of those you love are in constant flux:
- Your children get married, divorced, remarry and create new blended families
- Your family grows to include grandchildren, new sons and daughters in-law, new cohabitating partners all round, and maybe a new spouse too
- You acquire new assets and sell old ones
- You move house and downsize/upsize
- You may have changing healthcare needs
Should I include long term care provision in my bloodline planning?
Absolutely. There is no point in ring-fencing every asset you have so completely that you then cannot afford to live well in retirement and have sufficient funds available for long-term care should you need it.
Bloodline planning is about ensuring you leave a legacy for the next generation that is affordable and sustainable for you. You do not want your legacy to be that your children need to pay for your long-term care!
Should I include my business in my bloodline planning?
If you want to pass on your business to the next generation, you should create a separate business succession plan as part of your overall bloodline planning.
- You may not want to wait until your death for your children to take over - after all, you deserve a good retirement!
- You may also need to consider your fellow owners, directors, partners and employees in any succession plans.
- You also need to check if your family actually want to take over your business, or indeed are capable of running it.
For more details see our blog "Business succession planning - keeping it in the family"
Can Panthera Estate Planning help me with my bloodline planning?
Absolutely. Our estate planning services cover all aspects of bloodline planning, Wills, Trusts and more. Book your initial appointment with Paul Hammond to discuss your requirements.