Estate planning is one of those phrases we talk about, but what actually IS estate planning?
Let's start with what it's not. It's not buying shares or building investment portfolios or managing pensions. That's financial planning. It is also nothing to do with buying and selling houses!
Estate planning is basically "putting your house in order" in terms of what you own; property, money, possessions, the lot. Estate Planning is about working out how to manage those assets as you age, possibly helping family when you're alive by passing on some of those assets, and what you'd like to happen to those assets when you die. It is looking at The Bigger Picture.
So, estate planning includes:
- Writing a will
- Securing financial assets using Trusts
- Working out what happens to your business
- Succession planning (to maximise what the family gets)
- Making gifts in your lifetime
- Lasting Powers of Attorney
- Long term care planning
If none of that phases you, great. Pick up the phone and/or book an appointment with us to set up or revise your estate plan for 2024.
No, still don't get it
If you're no clearer about what estate planning is than 15 seconds ago, let's approach it from a different angle. Try this:
Sit in your lounge and make a quick list what you have in the room. Here's what you might include:
- TV and associated tech
- Sofas and furniture
- Family photos of you and the kids
- Heirlooms and new stuff precious to you
- Laptop / computer / phone / tablet
- Stuff for work
- Wallet/handbag
- All the other stuff that's none of the above
You should also look at the room itself as part of your home.
What your list means for your estate planning
Got your list? Excellent! Here's how it relates to estate planning.
TV and associated tech
This may represent quite a lot of money invested and monthly expenditure too, from buying the latest widescreen to your Sky subscription, and the broadband contract that powers it. However, it's also replaceable, and chances are in five years' time, you will have upgraded most if not all of it anyway.
Do I need to include it in estate planning?
No. Although having said that, make sure someone knows the location of the subscription account details - see the "laptop" section below.
Sofas and furniture
Again, your furniture is replaceable, and nobody will thank you for leaving them a worn-out saggy sofa in your Will! However, there is something to consider here, which is your long-term care provision. Once past retirement, you might need to subtly adapt your living spaces to enable you to live independently in your own home for as long as possible. So, you need to put in place provisions to pay for these adaptations and your long-term care.
Do I need to include it in estate planning?
Sort of, as part of long-term care planning
Family photos - you and your partner
This is the big one. Above all, estate planning is about putting your affairs in order. Ideally, you and your partner work through your estate planning together and ensure that you both are provided for should the other die, fall ill, become incapable of managing their affairs, or need care before the other. And, we hate to say it, what happens should you split up and divorce too.
Do I need to include it in estate planning?
Absolutely. Whatever your age, you should set up individual Lasting Powers of Attorney and update your wills if not done recently.
Family photos - your kids
Estate planning shouldn't be a mystery to your family. Many older people don't tell their family what provision they have put in place. We're not talking about telling them the details of who gets what in your will or how much you have in the bank, but the basics will help them understand what you have already planned. Your adult children should also be included in discussions about Lasting Powers of Attorney (LPAs) as you are likely to want to appoint one or more as attorneys.
Do I need to include it in estate planning?
Yes, yes and thrice yes. Whatever your age, you should set up individual Lasting Powers of Attorney and update your wills if not done recently ASAP.
Family photos - your kids (again)
What do you want to be your legacy to your children and grandchildren, your stepchildren and cousins, or indeed anyone in your extended family? Succession and bloodline planning puts in place ways to maximise your legacy after you’re gone.
Do I need to include it in estate planning?
100%. Succession and bloodline planning deals with the inevitable tax considerations, to maximise your family's inheritance and minimises inheritance tax. Bloodline planning also ensures your legacy passes to those you want it to, and not to anyone you don't. Remember to update your estate planning if family relationships change through divorce, separation, marriage or death.
Heirlooms and new stuff precious to you
What items would you like to remain in the family for the next generation to enjoy? And more importantly, who would be the best custodian of that item - your butter-fingered son or your super-careful granddaughter, for example? What will they value, and what (frankly) could be sold as nobody ever liked it anyway?!
Do I need to include it in estate planning?
Certainly. Unless you specify what passes to whom in your will, it could result in jealousy over jewellery, for example. If you really really care about who gets what, make sure you nail down your wishes in a letter of wishes document.
Laptop / computer / phone / tablet
In this case it's not the tech itself that's valuable, but the data they hold. If you got ill tomorrow and couldn't manage your own affairs, and had an LPA in place, that's good. BUT could those appointed as attorneys on your LPA actually access your online bank account to pay your bills or check your emails from the health insurance company?
Do I need to include it in estate planning?
Yes you do. For more details and ways to ensure access without compromising security, see our blog on bequeathing your tech.
Stuff for work
Actually, this is really about if you own your own business. If you do, you need to come up with a business succession strategy for when you retire or step down.
Do I need to include it in estate planning?
Yes, because if you don't, your spouse/partner and children may not inherit the business or your share in it. Also consider business LPAs for you and your business partners.
Wallet/handbag
This represents all your financial assets including bank accounts, pensions, investments and (yes) debts. Make sure all your finances are in order and if you have unmanaged debt, deal with it right now. There is no point in planning to leave the family money in your will if you can't pay your heating bill next month. Seek professional debt advice and help now, it is out there for the asking.
Do I need to include it in estate planning?
Finances are the backbone of estate planning, whether you're setting up Trusts to ring-fence assets or making provision for long-term care, or leaving a bequest in your will to charity.
All the other stuff that’s none of the above
To be honest, don't sweat it. It's just stuff.
Do I need to include it in estate planning?
No.
Your home itself
Chances are, the highest value single asset you own is your home (with the possible exception of your pension pot). There are strict laws around inheritance of property if you die intestate (without making a will) and the consequences can be dire. Equally, make sure you know where important documents such as the deeds are kept, so you can easily sell it if you want to move home to a more suitable retirement property, for example. If you co-own it and are not married to the co-owner, check the status of ownership in terms of joint tenancy, etc.
Do I need to include it in estate planning?
Please, if you own or co-own your home, make a will as your No1 priority. Even a simple will is better than none.
Our straightforward approach to estate planning
Hopefully, the above has shown you that estate planning isn't by any means just about spreadsheets and finances. It's about life, family, treasured possessions, your future care and a whole shedload more. And yes, it's about your stuff too, but if needs be, that's what the shed is for….
Looking for help with your estate planning?
Contact us here at Panthera Estate Planning. You can book an appointment either as an online call or in person at our offices in Waterlooville, Hampshire.