7 steps for smart estate planning

What do Bob Marley, Jimi Hendrix, Amy Winehouse, and Prince all have in common? They all died intestate - which means they died without having a will. 

Aretha Franklin is the latest musician to pass away without a trust or a will, with her four sons recently filing a document to the local court listing themselves as interested parties in her estate.  

It's hard to believe that so many wealthy stars wouldn’t have drafted something that outlines their wishes, particularly when musicians' estates often continue to generate significant revenue after their deaths.   

But they’re not alone. According to Co-op Legal Services, well over half of UK adults say they don’t have a will in place. A will is the only way to make sure your money, property, possessions and investments (known as your estate) go to the people and causes you care about. This means more than 31 million people are risking everything they own by letting the law decide who should inherit everything when they die. 

However it doesn’t have to be this way. With the right mindset and knowledge, drafting a will can be empowering, not depressing. By detailing what you’d want to happen after you die, and focusing on what your money can do for others, you can make meaningful changes that have the potential to alter your loved ones’ lives for the better. 

With that in mind, here are 7 steps for smart will and estate planning.

1. Choosing beneficiaries

Have you considered what will happen to your pension or investments if you pass away before you get a chance to spend them? We’re living longer than ever before so chances are you will get to enjoy a long and wealthy retirement, but to be on the safe side, it’s wise to add beneficiaries to your pension and investment accounts.

Nominating beneficiaries may inspire you to save more for the future. After all, many people feel discouraged from making their pension a priority because it’s hard to imagine living that long. With beneficiaries, you’ll have peace of mind that no matter what, your money will take care of you and your family.

2. Appointing an executor

When you make a will, it’s wise to name one or more people as an executor. This is the person whose role it is to carry out your wishes after you die.

Specific duties can include registering the death, getting copies of the will, applying for probate, and distributing the estate between beneficiaries.

It’s not an easy job so it’s worth discussing it through with your chosen person.

3. Make your loved ones aware of your accounts

When you pass away, will your loved ones know where your money is?

Many people die without giving their loved ones this information, creating avoidable challenges for those left behind. Save your nearest and dearest unnecessary stress and admin by having an honest conversation about which accounts you hold and where your investments are. 

4. Preparing children and grandchildren for inherited wealth

Another thing that very few people think about is how their loved ones will cope with inheriting large sums of money.

No one’s going to complain about receiving a hefty inheritance, but the money can easily disappear without careful and considerate planning. As you’ll know yourself, when invested and spent wisely, money can take on a life of its own.

Help your loved ones to make smart decisions by asking them about their plans for the future and discussing ways to make the most of their inheritance.

5. Establish a trust

A trust can be a valuable addition to your estate plan, particularly if you want to provide for young children, protect assets, or plan for specific circumstances like incapacitation.

Trusts can come in various forms, each serving different purposes, such as revocable living trusts, irrevocable trusts, charitable trusts, and more.

6. Life insurance

Life insurance is another aspect of estate planning that many people put on the back burner. But if your loved ones rely on your income, life insurance can protect them in the event of your death.

Compare a few different policies to find one that suits your needs. Some pay a lump sum, but others will provide your loved ones with regular income payments. It’s simply a matter of figuring out what works best for you and your dependents.

7. Give generously while you’re alive

If you’re looking for a meaningful and cost-effective way to manage your estate, give generously while you’re alive. You might like the idea of leaving your loved ones large sums of money in inheritance, but spending your money in the here and now is not only more enjoyable, but it could also potentially reduce your inheritance tax (IHT) bill too.

Before making any large gifts, talk through your plans with us. We’ll work out whether your gifts will be subject to IHT if you were to pass away in the next seven years.

In summary, although estate planning might sound daunting, it’s an essential process that everyone should undertake to secure their financial legacy and protect their loved ones. By taking charge of this now, you can ease the burden for those left behind, ensure a lasting legacy for generations to come, and relax knowing it’s all sorted.

Please get in touch if you’d like to find out more.