As financial advisers, our clients often ask for help with building their wealth. But we’re also here to help them make sure they can pass their wealth on efficiently.

If you haven’t started your estate planning – or if you haven’t written it down – this checklist will help get your thoughts in order.

1. Make a Will

Almost three times as many people wrote a Will in 2020 compared to 2019, unsurprisingly. Your Will is an essential part of any financial or estate planning, as it sets out how you wish for your assets to be divided upon your death.

Without a Will, your estate will be distributed according to intestacy rules rather than your wishes. Wills are increasingly important for unmarried couples, for those who have dependents who rely on them financially, or for those who wish to leave assets to those outside their immediate family.

Your Will is the only way for you to have your say in how you want your legacy (money, possessions and other assets) to be distributed:

• You decide who you want to benefit from your legacy
• You decide what should go to who
• You decide how you want your beneficiaries to inherit
• You decide who you trust to be your Executor

Making a Will can now be done online. Legal professionals review your answers, help you draft a Will, and send it for you to sign when it’s ready.

Wren Sterling has an arrangement with third parties, giving you discounted Wills, so please speak to your adviser.

2. Consider a Power of Attorney

A Lasting Power of Attorney is a legal document that allows others to make decisions on your behalf – about your finances or health and wellbeing. There are many reasons why you might be unable to make these decisions. Making an LPA isn’t just about getting older, or protecting yourself against terminal illnesses.

A common misconception is that your partner will be able to make decisions on your behalf. However, your partner does not have the legal right to make decisions on your behalf – no matter how long you’ve been together or whether you’re married. Neither does having a joint account, or being their ‘next of kin’.

A Lasting Power of Attorney will come into effect once an individual is unable to manage their affairs for an extended period of time. But it cannot be applied after you have lost your competency or your consciousness, unfortunately, you have already waited until it is too late. There are options available to the families of those who have waited too long to sign, but these options are costly, involve court intervention, and will take some time to put into place.

3. Calculate your Inheritance tax

The allowance freezes announced in the 2021/22 Budget over the next few years will mean many more estates are likely to be liable for inheritance tax. Inheritance Tax (IHT) is a tax on the estate of someone who has died, including all property, possessions and money. If your estate is worth more than £325,000 then you may need to pay Inheritance tax or investigate the exemptions that apply.

Your adviser can help you make the most of the reliefs and exemptions which apply to you, reducing or even removing this bill with tools like:

• Gifting – You can give away part of your estate during your lifetime, which becomes exempt from tax after 7 years.
• Trusts – Putting assets into a trust allows them to exist separately from their original owner. This can help you provide for vulnerable beneficiaries, allocate funds for a particular purpose.

4. Allocate funds for your care

For those who do not have funds to pay for their care, their local authority will step in – but they will have little to no say in where they go, or the quality of that care.

Your adviser can help you consider strategies to finance any care you or your partner may need and highlight the effect this may have on your estate. They can then help you plan how you will pay for this.

5. Do you need specialist services?

You do not need to have a solicitor to help you complete your estate planning. But if you have complex needs, you may benefit from a specialist who will help ensure there is no dispute later on. We partner with a number of firms to provide access to specialist services – while you’re completing your financial planning, we’ll let you know if we feel your circumstances require the input of a lawyer, tax specialist, accountant, or mortgage adviser, and can recommend one of our partners. We work with these specialists regularly to ensure our client’s estate planning is as seamless as possible.

6. Talk to your family

“Speaking about money as a family isn’t always the easiest thing, although initiating the conversation can be hard, most people are glad they found the time – and strength – to do so.” Alex Holder wrote an article for us about talking about money for a previous edition of Money Matters, but the messages in her article have never been more relevant.

We’ve found an unexpected benefit to hosting most of our appointments online – either through video chat or telephone. We can invite our client’s family members to discuss their financial situation with us, allowing them to ask questions about the financial health of their loved ones, and give them peace of mind about the future.

All information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation, are subject to change.