Many people worry that after a lifetime of working hard and saving that a significant portion of their estate could be eaten up before their loved ones are able to benefit from it. Whether you are supporting children, thinking about future generations or simply wanting to keep things fair, it is natural to ask how your estate can be protected.
While there is no single solution that guarantees this, there are sensible steps you can take to help preserve more of your estate for your family.
We asked Alexandra Fox, Solicitor and specialist in Wills and estate planning to outline key aspects to consider.
Make a Will
A well prepared will is the foundation of protecting your inheritance.
Wills ensure that your estate passes in the way that you want it to. Without one, your estate would fall under the intestacy rules and may not reflect your wishes.
There are different types of Will which can assist with your inheritance tax and estate planning. For some families, particularly those with children from previous relationships or more complex arrangements, a will can include types of trusts to help protect your share of assets. For example, a discretionary trust can allow your spouse to benefit during their lifetime, while helping to ensure your share ultimately passes to your chosen beneficiaries on their death.
Lifetime Gifts
In some cases, passing on assets during your lifetime can be a practical way to reduce the value of your estate for inheritance tax purposes.
Some of the most common examples include:
- Gifts within a £3,000 annual exemption
- Small gifts of up to £250 per person per tax year
- Regular gifts made from surplus income
These can be a simple way to support family members now, while also considering your longer term plans. Other gifts can have some inheritance tax benefits, which we would be happy to discuss with you.
Trust Planning
Some assets can be placed into trust to facilitate their distribution after your death. You would be able to retain some benefit from these assets during your lifetime, but would not be absolutely entitled to them.
Discretionary trusts are particularly useful as your trustees can manage the trust for you and consider when funds should be distributed to your beneficiaries. They give greater flexibility when dealing with your estate, but by their very nature, require you to appoint people whom you trust to manage them.
Trust planning can ease administrative efficiency and protect the most valuable parts of your estate for the future.
Bringing it all together
Protecting your family’s inheritance is often about taking a balanced approach. A will, combined with careful use of gifts and trusts, can help you:
- keep control over how your estate is distributed
- reduce potential inheritance tax exposure
- provide long term security for your family
- plan for changing circumstances over time
How can we help?
Our experienced Private Client team would be happy to discuss your circumstances in an initial, free, no-obligation appointment where they will advise on inheritance tax (IHT), Wills and estate administration. Where appropriate, we can also introduce you to our financial services team, who can support you with longer-term financial planning alongside your legal arrangements.
Call us today on 01229 811811 to book an appointment.