Many people mistakenly believe that estate planning in Cheshire starts and ends with preparation for the day that they die. However, estate planning is a more complex process; here, we look at the importance of estate planning and the most common errors people make.
Estate planning is among the most important measures people adopt in their lifetime. Without it, there can be serious consequences.
When you don’t make plans, your preferences remain unknown and can’t be applied when you aren’t around to speak for yourself. Additionally, the loved ones you leave behind and your assets can be left unprotected.
Presuming estate planning is just for older people
Perhaps the most common mistake is to believe estate planning is only necessary when you are older. While being young can make us feel invulnerable, anything can happen to us at any point in time. Injury, illness and death are not events restricted to the aged asset owners.
Regardless of your age, when you have children and/or a dependent, and own property or assets, estate planning is essential. Putting provisions in place for an unfortunate event protects the people who rely on you financially, and ensures they are well taken care of.
Neglecting to plan for family drama
It’s often simpler to assume that when we die, those we leave behind will take care of each other and act fairly. However, sadly, not all relationships are so straightforward.
Proper estate planning removes disagreements and drama that sometimes follows a death, stating clearly who you wish to benefit, backed up by the law.
Misunderstanding joint assets
Many people assume joint-shared assets and properties pass to their surviving partner. However, this isn’t always so. For instance, no right of survivorship exists if a property is owned simply as tenants in common. As a result, the property passes to the beneficiary named in the will. When no will is written, intestacy rules apply to the individual listed first.
This causes issues, particularly if a couple is unmarried or has cohabited without being in a civil partnership, as the surviving partner’s share may pass to the parents of the deceased. A will avoids this issue.
Neglecting to update a will
As circumstances change, wills require revision. Critical times to update wills include marriage, having children and divorce.
After making a will, it’s wise to review it at regular intervals or sooner if a significant life change occurs. Some events, like divorce and marriage, can render a person’s will null and void, so consulting an expert in estate planning is recommended.
Failing to consider tax planning
A prevalent estate planning pitfall is to overlook the importance of tax planning strategies. People who make a will unassisted by a solicitor or financial adviser often miss out on essential Inheritance Tax (IHT) planning advice. This can put beneficiaries at risk of facing a larger tax bill than necessary, leaving less wealth to support them in their life without you.
Tax strategies like lifetime gifts, using available residence allowance and pensions and changing how your property is owned are all effective methods to potentially reduce an IHT bill – ensuring dependants have sufficient provision. Expert tax planning advice is vital, however, as each set of circumstances is different, and strategies must be tailored to work.
Overlooking arrangements for incapacity and illness
Correct estate planning arranges for the time when you die, but also covers your mental and physical state until then; this includes mental incapacity and critical illness.
Consider what might happen if you could no longer work because of an illness. Could your partner or spouse cope with mortgage repayments and monthly outgoings? What if you permanently or even temporarily lost mental capacity? With no one appointed in your will to make welfare and health decisions or manage your finances, the responsibility of who decides fall to the court, an often time-consuming and costly process.
Creating a Lasting Power of Attorney (LPA) is a crucial element of estate planning. These documents enable people to appoint a person they trust to make key decisions on their behalf if they are no longer able.
Do you need assistance with estate planning in Oswestry or Cheshire?
With over 25 years helping clients, at Hartey Wealth Management, our experienced team specialise in estate planning. We understand that you should never delay formalising your wishes for the future.
Regardless of your age and situation, if you are ready to prepare to pass on your assets and ensure your family have adequate provision after you die, get in touch with us today.
