Estate planning is the process of deciding how your assets, like property, money, investments and items, will be managed and distributed after you pass away.

It’s more complicated than just writing a will, it also involves planning for taxes, making important healthcare decisions and providing clear instructions for your executors to follow.

At Provira, we know that planning for the future isn’t always easy, but it’s one of the most important things you can do for the people that you love.

Estate planning means that whatever happens, all of your wishes will be respected, your assets will be protected, and your family will be supported when you’re no longer here to guide them.

Here, we tell you everything you need to know about estate planning.

What is estate planning?

To put it simply, estate planning is the process of deciding how your assets will be managed and passed on after your death or if you can no longer make decisions yourself.

Your estate includes everything you own, from your home and savings to personal belongings and investments.

A good estate plan means that your wishes are clear and your loved ones won’t have to deal with unnecessary stress during an already emotional time. Estate planning can seem sombre to think about, but it really is important for protecting the people closest to you.

Why estate planning is important

Without an estate plan, your property and savings may fall under ‘intestacy laws’. These laws are designed for situations where a person has not left a will. 

In this case, your assets will be distributed under local laws, which may be different from how you intended. For example, if you are living with a partner but are unmarried, intestacy laws state that they may not be eligible for any inheritance.

Whilst the inheritance process can still move forward without a will, having one can make the process much easier and less stressful, especially at a time when emotions usually run high. It also means that your estate will be distributed exactly how you want it, not how the law decides.

But estate plans don’t just decide how assets are distributed. A good estate plan also includes ways to pay (or reduce) Inheritance Taxes, as well as notes around healthcare decisions you want if you become incapacitated.

What’s included in an estate plan

Normally, an estate plan is made up of a few key elements that provide a picture of how you want your estate to be managed.

This includes:

A will

Your will lays out exactly how you want your assets to be distributed and who will carry out those wishes (known as your executors).

If you have children, it can also include wishes for guardianship. Some people also include funeral preferences and details about personal possessions in their will.

Without a will, the law, not you, decides who inherits what, so it’s an important document to create!

Trusts

Trusts can help you describe more closely how your beneficiaries receive money. As trusts are seen to be outside of your estate, they can also be tax-efficient ways to pass on lump sums. 

Examples of trusts include:

• Discretionary trusts, which allow you to decide how and when beneficiaries receive funds. This is particularly useful for young beneficiaries or those unable to look after themselves.
• Life interest trusts, where someone benefits from the asset (like rent from a property) during their lifetime, before the assets pass on to others. These tend to be used to protect generational assets. 

Setting up a trust can sound like something only very wealthy people do, but with the right advice, it can be a great way to protect your assets and your family.

Lasting Power of Attorney (LPA)

A Lasting Power of Attorney is important because it allows you to choose someone to make financial or health decisions on your behalf if you lose mental capacity.

If you want to, you can assign different people to handle your financial and health affairs – but the important thing is that you get to choose. Without LPA, the law decides who can make these decisions on your behalf.

Inheritance Tax (IHT) planning

In the UK, any estate valued above £325,000 may be liable to pay Inheritance Tax at 40%.

Whilst leaving assets to a spouse, civil partner or charity is usually tax free, Inheritance Tax can be a huge cost to cover without the cash available. 

The problem is, HMRC asks your estate to pay the tax within 6 months of your death, and it has to be paid before any of the assets, including money, are shared out.

Estate planning helps you find ways to reduce IHT, meaning more of your estate can reach your loved ones, and less goes into the hands of the tax man.

Probate and executors

Probate is the legal process of giving your executors the authority to action your will and manage your estate. During estate planning, you will need to name the executors that you would like to manage this. 

Executors are responsible for collecting and valuing assets, paying debts (including IHT), and distributing the inheritance once the process has been completed.

When should you start estate planning?

Estate planning is easy to put off, and many people think it’s only something that wealthy or elderly people do.

But the truth is, it’s something everyone should do, ideally as soon as possible.

Whether you’re buying your first home, starting a family or planning retirement, having your estate in order means you’re planning for all eventualities.

At Provira, we recommend that you review your estate plan when:

• You marry, separate, or divorce.
• You have children or grandchildren.
• You buy or sell property.
• Tax laws or your financial circumstances change.

How to avoid common mistakes when estate planning

Even with the best intentions, estate planning can become messy.

Blended families, increasing property values and owning a business can all make it more complicated. And just to make things worse, tax rules are constantly changing too!

But one of the biggest challenges that executors face is that Inheritance Tax must be paid within six months, even though the money in the estate can’t be released until probate is over.

That’s where Provira can step in to help.

At Provira, we understand that dealing with an estate can feel like a lot, especially during an already difficult and emotional time.

Our Estate Advance helps executors access up to 50% of the estate’s value within just three days. That way, you can pay Inheritance Tax, legal fees and any other expenses quickly and easily.

There are no monthly repayments, no personal guarantees, and no early repayment fees.

Get in touch with the team today to find out more.

Estate planning for the future

Estate planning is more than just financial admin, it’s a way to make sure your wishes are honoured and your loved ones are cared for. 

Whether you’re just starting your planning journey or managing an estate that’s already in motion, we’re here to help you every step of the way.

Need help managing an estate?

If you’re an executor facing an Inheritance Tax bill or other estate expenses without funds available, Provira can help.

Our caring and experienced team can help you access the value tied up in an estate quickly and transparently.

Speak to us today or start your application online here.