All up in smoke!
Bonfire Night, the smell of smoke in the air and with weeks of planning - dozens of fireworks gone in a few short minutes and what is there to show for it?
Likening the spectacle of Bonfire Night to estate planning is not all that hard to do.
It’s about preparation, timing and enjoying the spoils at the end of it. That said, it’s usually your family enjoying the spoils of it while you find yourself running around lighting the next fuse or grabbing the buckets of water – much like estate planning!
It is important to be organised when it comes to estate planning, envisaging the end result and doing your best to avoid any surprise tax liabilities, claims against your estate, family disputes and other unintended consequences.
So how do you avoid all your planning going up in smoke?
1. Involve your family
If you have adult children or nieces and nephews who are to inherit then involve them in your estate planning. It shouldn’t necessarily be a secret amongst your closest family what you intend to happen only to be revealed on your death. Sometimes, it might be more important to make family aware if they aren’t going to inherit to the extent that they might have expected.
Avoiding surprises of the good or bad variety and having the opportunity of explaining your reasoning can often avoid disgruntled family members causing issues on your death.
2. Prepare a Will
Without a Will, your estate passes in accordance with the intestacy rules. This means your estate passes to particular individuals depending on your circumstances and most are surprised to learn this quite often means that not “everything passes to the surviving spouse/civil partner”.
Having a Will in place means you can decide who inherits what and even when they inherit it. For this reason, preparing a Will is the cornerstone of estate planning.
3. Don’t make promises you can’t keep
It is essential your plans for your estate are recorded in a Will. Avoid promising things verbally.
This scenario occurs frequently when family businesses or farms are involved. One child could have been led to mistakenly believe that by being heavily involved in the running of the enterprise they will inherit it on your death. They can be sorely disappointed when in fact their siblings also inherit a share of the pie that they haven’t helped to grow – to coin a phrase!
4. Keep it simple (often!)
We all might want to re-create the spectacularly complex firework displays we see on the tv in our own back gardens but often simple displays, expertly executed, will please most of the family.
Administering estates and dealing with the practical implications of someone’s death can be stressful, technically difficult and expensive. These issues can be made worse if your affairs are convoluted, complex and badly organised.
Keeping accurate and up-to-date records of your assets and liabilities, compiling a schedule of the gifts you have made, and even making your family aware of the whereabouts of your original Will can help make the process simpler for all.
When it comes to estate planning, ensure you yourself can understand and explain the arrangements you have put in place. If you can’t it is likely your family will struggle too. Ask your advisor to provide a layman’s explanation of any arrangements they have put in place for you and keep this with your paperwork.
If things do need to get complicated, prepare your family for this and reinforce the need for them to seek the appropriate advice at the relevant time to ensure your plans come to fruition as you had intended.
5. Take advice, first!
Like lighting a fuse and watching the firework shoot up into the sky before exploding, once you have gone through with some transactions it is impossible to undo them. This could, for example, include making a gift of property or cash, selling assets that results in substantial chargeable gains, disposing of assets which would otherwise have attracted valuable reliefs for Inheritance Tax.
To help avoid setting off an unintended chain of events, speak to specialist advisors and ensure you have considered all the relevant factors before lighting the fuse.
By taking into account all of these points, you will be well ahead of many when it comes to ensuring your estate planning doesn’t simply go up in smoke!
If you would like to discuss any of the above, please do not hesitate to get in touch with the Private Client team - 0800 84 94 101 or contact us here.