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Estate planning
Debts & liabilities
Remember you are creating a snapshot of a moment in time,
so you can deduct anything you personally are responsible for
paying such as household bills and bills for goods and services
you’ve received but not yet paid for (e.g. building work) as well
as loans, outstanding credit card balances and overdrafts.
Mortgages and joint property
Deduct your share of any mortgages or secured loans on a
property from the property’s value.
Debts owed to close friends or family
You can only deduct these if they’re legally enforceable.
This is when either:
•
the deceased person and the lender made a written or
verbal agreement about repaying the loan
•
there’s evidence that the person was making repayments.
There are other debts and liabilities which can be deducted for
probate matters, such as certain gambling debts and funeral
expenses, but thankfully, we don’t need to consider these now.
You now have a rough guide of your net worth as it stands
today. You may be surprised that it’s not more. This is because
some insurance policies and death in service beneits are not
included. However much they could all potentially enhance
your estate for those left behind, they cannot be accessed by
you and therefore do not oficially form part of your estate for
estate planning purposes.
Where you want to get to?
This part of estate planning is less about the numbers, and
more about identifying the obstacles. Everyone has different
goals in life, and sometimes there are different goals within the
same family.
In our experience, some of the goals which can cause dificulty
include the following:
•
becoming inancially independent
•
helping offspring to get on the property ladder
•
whether to downsize the family home
•
giving away assets
•
paying for care home fees
•
paying off debts for other family members.
As many clients have discovered, making decisions about
these types of problems is much easier when a third-party,
non-family member is involved. Particularly when that
third-party is a professional and experienced accountant
who can provide tax-eficient advice.
How you would like to do so?
In parts of the UK a property purchased for £8,000 in 1970
could easily be worth well over £500,000 today: a signiicant
sum for anyone lucky enough to be in line to inherit all or part
of it. The massive rise in house prices is just one of the reasons
that estate planning is a must for even those of modest means.
However, as the list of assets above shows, property is only
part of the equation.
An essential part of the estate planning service is the time we
spend with clients, discussing the various options to help clients
achieve these goals. On paper, it could be that the most
logical solution could be X, but how many of us are logical
when it comes to our own family and inances? This is where a
professional with experience can make a real difference.
Whether you are hoping for an inheritance, want a mediator for
a difference of opinion for a family matter or would like to simply
hang on to what you have, a little planning goes a long way.
Trusts
A trust is a way of managing assets (money, investments, land
or buildings) for people. There are different types of trusts and
they are taxed differently.
Trusts involve:
•
the ‘settlor’ - the person who puts assets into a trust
•
the ‘trustee’ - the person who manages the trust
•
the ‘beneiciary’ - the person who beneits from the trust.
What trusts are for
Trusts are set up for a number of reasons, including:
•
to control and protect family assets
•
when someone’s too young to handle their affairs
•
when someone can’t handle their affairs because they’re
incapacitated
•
to pass on assets while you’re still alive
•
to pass on assets when you die (a ‘will trust’)
•
under the rules of inheritance if someone dies without a
will (in England and Wales).
Talk to us about the value of your estate today.
Call us to find out more.