With the end of the tax year not far away, now is a particularly good time to review your estate planning. This is an ideal opportunity to ensure your estate is structured as efficiently as possible, and that your wealth will still benefit future generations in the way you wish.
Here are our top ten tips for making your wealth work best for you and your family.
1. Does your Will need updating?
Your beneficiaries’ circumstances may have changed, so there could be a better way for them to inherit your estate.
2. Do you have assets abroad?
If you own property outside the UK, it might be affected by local succession issues and inheritance laws – in which case you could need a separate Will for that jurisdiction. We’ll be happy to check for you.
3. Do you have a digital assets record?
It’s a good idea to review the assets and information you hold digitally in online accounts. Store your logins and passwords securely and ensure the executors can access them after your death, along with instructions on how to administer your online accounts.
4. Do you still have the optimum trust arrangements?
The trustees should review your trust investments, decide what to do with the trust’s income and capital, and complete the tax returns for the trust. It may be possible to improve your trust arrangements, by setting up an extra trust as part of your estate planning.
5. Pension rules have changed, so should your pension nomination forms change too?
If you decided a pilot trust (often called a spousal bypass trust) should receive your pension scheme death benefits, you might want to change the nomination form. The current tax rules mean these trusts are now less tax-efficient.
6. Have you thought about writing your life insurance policies under trust?
Specifying that you want your life insurance policy proceeds to be paid to a trust rather than your estate means they won’t be subject to inheritance tax on your death. If you put this in a letter of wishes, make sure it doesn’t conflict with your Will.
7. Have you set up Lasting Powers of Attorney?
It’s a safeguard that will give you peace of mind. A Lasting Power of Attorney lets you appoint the people you want to make decisions on your behalf about your property and finances (and optionally your health) if you’re no longer able to make them yourself.
8. When did you last look at your estate/tax planning?
You may be able to restructure your estate to reduce the inheritance tax payable on your death, using the various exclusions, exemptions and reliefs. As the end of the tax year approaches, it’s worth thinking about using your £3,000 annual exemption for gifts, if you haven’t already done so. It’s also a good time to update your records of gifts you’ve made.
9. Are you using normal expenditure out of income exemption?
The ‘normal expenditure out of income’ exemption is an effective way of reducing inheritance tax, so it’s worth making the best use of it. As long as you meet the exemption conditions, the lifetime gifts you make will be exempt from inheritance tax, and there’s no limit on the gift amounts.
10. Will your estate qualify for the recently introduced residence nil rate band?
From 6 April 2017, an additional residence nil rate band has been introduced, reducing the inheritance tax paid when you leave the family home to your descendants. The terms of your Will and how your estate is structured will both affect how much relief can be claimed. It’s well worth discussing this with us, so to check how your family might benefit.
We’ll be delighted to help you with any aspect of your estate planning, whether it’s before the end of the tax year or at any time in the future. To make an appointment, please contact Fiona Lewsey.