Estate planning is the preparation and arrangement of how to leave your money, property, and possessions to loved ones when you are no longer here. The aim is to make sure your final wishes are met and are as tax efficient as possible.
Although it’s not nice to think about, getting your affairs ready for when you pass away can bring real peace of mind as you get older.
Making a will is a key part of estate planning, but it’s only the start. Without careful consideration of the financial impact, you could be leaving a big inheritance tax burden behind.
Inheritance tax (IHT) can take a huge chunk out of the value of your estate.
If your estate is worth more than £325,000 (the inheritance tax threshold or ‘Nil Rate Band’), anything above this amount could potentially be taxed at 40%.
Tax treatment depends on your individual circumstances and may be subject to change in future.
For many people, simply owning their own home may be enough to put them over that threshold.
If you’re smart with your money – and start thinking about estate planning sooner rather than later – there are ways to help minimise inheritance tax. These could include:
- Making gifts to family and friends before you die
- Setting up a trust fund for those you want to benefit from your estate
- Putting your life and pension policies into a trust so they’re not included as part of your overall estate
Estate planning can be complex and is not a simple process, so it’s important that you understand how it works and that you get the right financial advice.
Learn more about estate planning and the benefits of an estate plan on the Wesleyan website:
Please note The Financial Conduct Authority does not regulate inheritance tax planning and trusts.
Advice is provided by Wesleyan Financial Services Ltd.
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