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What makes up your estate?

 

 

What is an ‘Estate’?

The word ‘Estate’ is just a fancy way of saying ‘everything you own’. So it includes your house, cash in the bank or building society, shares, ISAs, unit trusts, OEICS, investment bonds, gilts, the value of your pension funds and the value of your life insurance that would be paid out on your death.

 

Estate planning is the process of making sure that what you own can be passed on your death to the people YOU choose ( your beneficiaries), efficiently and without paying too much tax.

 

Estate planning is the final leg of your financial planning journey, if you like.  This journey has three legs: creating wealth, conserving wealth, distributing wealth.

 

Every person has an allowance (which usually changes every year) that they can use to reduce the tax payable on their estate on their death.  If their estate is below this allowance there will be no tax to pay, so that’s good news.  But will it pass to your beneficiaries efficiently, without too much hassle, and will it get to the people you want.

 

The last thing you would want, probably, is everyone fighting over who gets what. This can end up in court to get sorted out, costing a lot of money.

 

The Use of a Will

 

The simple solution is to make a Will.  Finantium can help you with this.  So every person should make a will, no matter how small, or large their estate.

 

For larger estates, making a Will can help to reduce tax payable on your estate.

 

But a Will is only part of the solution.  Your pension and life insurance will all fall into your estate on your death.  This may not be the best solution as it can just add to your estate and may just increase your eventual inheritance tax (IHT) liability.

 

The Use of Trusts

 

In this case, the solution is to use a Trust to ensure that these assets stay out of your estate, but still benefit the people you choose.

 

Finantium can help in drafting suitable trusts to keep your liabilities to a minimum and ensuring that the right money ends up in the right hands at the right time.

 

So Estate Planning is about:

 

Paying the minimum tax to the government on what you own when you die

Making sure the right people benefit from the right money (income or capital or gifts) at the right time.