Unlocking the Power of Legacy: Why Planning Your Estate Matters

Talking about dying and life after death can be a difficult subject, in particular with loved ones. This article explores why talking about dying and grief is crucial when it comes to sorting out your finances.

At HJP Chartered Financial Planners, we frequently engage our clients in conversations about planning their legacy. While these discussions can be challenging, they are essential for ensuring that your wishes are fulfilled, and your loved ones are supported when you're no longer around.

Here are some things to think about, and why it’s so important to plan your legacy.

Life after death: Planning your Estate.

Estate administration is the process of dealing with legal, financial and personal tax affairs after death. Careful planning ensures your finances are distributed in a tax-efficient manner, ensuring your loved ones receive the financial support they need.

Also, when did you last update your Will? Stay in control of what happens to your finances in the event of your death and simplify the process for your loved ones during a difficult and emotional time. You should also be aware that if you marry after writing your Will, it is no longer binding unless it was written in anticipation of marriage.

I would also recommend setting up a meeting with your family to make your wishes upon death made clear, to prevent any surprises. Being open with your family, particularly if you have a blended family where things may be more complex, allows loved ones to ask questions and understand why you have made certain decisions. That way, when you do pass, there are no unanswered questions adding to their grief.

What happens when the unexpected happens?

It can be hard to face life’s ‘what ifs’, but putting plans in place to help future-proof family finances can make a real difference to peace of mind and financial wellbeing. For example, Life Cover (including Term Assurance and Whole of Life) – can provide a tax-free lump sum to whoever you select by way of a Trust.

Also, have you considered who will make important decisions on your behalf if you are no longer able to yourself? There are two types of Lasting Power of Attorneys to consider: one for your property and financial affairs, and one for your health and welfare.

Ensure HMRC is not your biggest beneficiary.

Without good advice and careful planning, HM Revenue and Customs could be the biggest single beneficiary when you die. 

There are several ways to minimise liability to Inheritance Tax, such as utilising the annual tax-free gift allowance or by taking out life insurance to help your family avoid paying unnecessary tax after your death.

Wealth can be shared both before and after death, but you might have concerns about passing on large gifts if you don’t have control over who the beneficiaries will be. This is where setting up a trust can help. This is a legal entity that holds assets before they are eventually released to your chosen beneficiaries. Generally, assets held within the Trust are kept out of your estate for probate purposes.  An appointed trustee administers the assets on behalf of all beneficiaries and carry out the terms of the trust.

Join the conversation.

As financial advisers we understand the significance of planning for the future, not just financially, but also emotionally and practically. I’ve witnessed firsthand the peace of mind that comes from proactive legacy planning. I encourage you to join the conversation by engaging in open and honest conversations about death and financial matters.

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 and Powers of Attorney involve the referral to a service that is separate and distinct to those offered by St. James's Place and are not regulated by the Financial Conduct Authority.

By Yvonne Bavin

Director and Financial Adviser

HJP Chartered Financial Planners

To find out more about Yvonne, click here

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