Estate planning is the process of deciding what happens to your money, property and possessions during your lifetime and after you are gone. It is a subject many people put off, yet a little planning can spare loved ones considerable stress, expense and uncertainty at the hardest possible time. This section explains the building blocks of estate and inheritance planning in clear terms, from wills and inheritance tax to lasting powers of attorney. We are an education resource, and estate planning is highly personal, so nothing here is a substitute for advice from a qualified solicitor or financial planner.
Why plan your estate
Without a plan, the law decides what happens to your estate, and the outcome may be very different from what you would have chosen. Planning ahead lets you set out your wishes clearly, provide for the people and causes you care about, and reduce the administrative and tax burden on those you leave behind. It is not only for the wealthy or the elderly; anyone with property, savings, a business or dependents benefits from having their affairs in order. The earlier you start, the more options tend to be available.
Wills
A valid, up-to-date will is the foundation of any estate plan. It names the people who will carry out your wishes, sets out who inherits what, and can appoint guardians for children. If you die without a will, your estate is distributed according to fixed legal rules that may not reflect your relationships or intentions, and unmarried partners in particular can be left with nothing. Life changes such as marriage, divorce, children or buying property are all good prompts to write or review a will, and it should be kept somewhere safe and known to your executors.
Inheritance tax
Inheritance tax can apply to what you leave behind, and understanding the basics helps you plan sensibly. In broad terms, estates above certain thresholds may be taxed, while various allowances, exemptions and reliefs can reduce or remove the liability, including provisions for passing wealth to a spouse or civil partner and for leaving a main home to direct descendants. Because the rules are detailed and can change, and because the right approach depends entirely on your circumstances, professional advice is especially valuable here. Some people also use gifts, trusts or life cover as part of a wider plan, each of which has its own rules and consequences.
Power of attorney
Estate planning is not only about death; it is also about protecting yourself if you lose the ability to make decisions during your lifetime. A lasting power of attorney lets you appoint people you trust to act on your behalf.
- Property and financial affairs. Allows your attorneys to manage money, pay bills and deal with property.
- Health and welfare. Covers decisions about your care and medical treatment.
- Peace of mind. Putting these in place while you are well avoids costly and slow alternatives later.
Bringing it together
A good estate plan connects these pieces into a coherent whole: a current will, a considered approach to inheritance tax, powers of attorney in place, and clear records that your executors can find. Reviewing everything every few years, or after a major life event, keeps the plan aligned with your wishes and the current rules. Working with a solicitor and, where relevant, a financial adviser ensures the documents are valid and the strategy is sound.
Tax thresholds, allowances and rules around inheritance evolve with each budget and reform. Our latest personal finance and planning news tracks the changes that affect estates and families, helping you keep your plans current. Explore the recent articles to stay informed and prompt a timely review of your own arrangements.