Planning what will happen to your money and possessions after you die might not be on your radar just yet. It can be difficult to come to terms with the idea of no longer being around loved ones, after all. But experts advise that it's wise to start planning sooner rather than later for peace of mind should something unexpected occur in the future.
The consequences of failing to do so can be distressing for all involved. If you die without a will for example, your estate will be divided up by what's known as the laws of Intestacy. These rules can dictate everything from who inherits your savings to who looks after your child - and the results might not be in line with your wishes.
What does estate planning involve?
There are several reasons why you might want to begin financial estate planning and lots of elements involved as a result. But in short, this legally binding process should set out how your assets and responsibilities will be passed on to others after you die.
Your estate plan might stretch to include:
- Dictating how your assets will be distributed, including any cash gifts to loved ones or charity
- Establishing lasting powers of attorney to give someone legal authority to make decisions on your behalf if you lose mental capacity
- Choosing guardians for dependents
- Inheritance Tax planning to reduce liability
- Setting out specific funeral wishes
- Nominating who will execute the details of your will
When should you start estate planning?
Some people think that estate planning is a task for later life. Others believe it's reserved for the wealthy - possibly because the term 'estate' sounds grander than its true meaning. But the reality is that you don't need to be retired or rich. Nobody knows what the future holds - and planning early can help you take care of loved ones.
Estate planning is an ongoing process too that should evolve as you move through life. This means reviewing your plans in line with major life events such as getting married or divorced, having children and buying property or assets.
Do you need professional support?
It's possible to plan your estate independently and it may be tempting to do so if you want to save money on solicitor fees. But documents such as wills are legally binding, and any errors can cause problems in the future that you won't be protected against.
And if your situation is particularly complex, for example if you own property abroad, working with legal professionals will give you full confidence that your wishes are met. You'll also have reassurance that your affairs are handled in the most tax-efficient way.
Is it about time you gave serious thought to your estate plan?