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Estate planning involves deciding how to distribute assets after your death. It can be complex, but it's important to have one in place to ensure that your wishes are respected, and your loved ones are taken care of. &nbsp;You can use this article as your guide to estate planning, as it provides an overview of the process. &nbsp;<h2>Why is estate planning important? &nbsp;</h2>There are several reasons why estate planning is important: &nbsp;<ul><li>To ensure that you split your assets according to your wishes. If you die without a will, your assets will be distributed according to government guidelines. These guidelines may not be in line with your wishes. &nbsp;</li><li>To minimise inheritance tax (IHT). Individuals pay IHT on the value of an estate above a certain threshold. Estate planning can help to reduce the amount of inheritance tax that your loved ones have to pay. &nbsp;</li><li>To protect your loved ones from financial hardship. Estate planning can secure the financial future of your young children or dependent relatives after you pass away. &nbsp;</li><li>To choose someone to make decisions on your behalf if you become unable to. If you are unable to make decisions, estate planning ensures that you choose someone you trust to make decisions for you. &nbsp;</li></ul><h2>What does an estate plan include? &nbsp;</h2>Estate planning can involve a variety of different elements, including: &nbsp;<ul><li>Making a will.&nbsp;A will is a legal document that sets out your wishes for the distribution of your assets after your death. &nbsp;</li><li>Setting up a trust.&nbsp;A trust is a legal arrangement that means you can transfer ownership of your assets to a trustee. They will then manage your assets for the benefit of your beneficiaries. &nbsp;</li><li>Appointing a power of attorney.&nbsp;A power of attorney is a legal paper that lets someone make choices for you if you can't. &nbsp;</li><li>Appointing a healthcare proxy.&nbsp;A healthcare proxy lets someone make medical decisions for you if you can't make them yourself. &nbsp;</li><li>Purchasing life insurance.&nbsp;Life insurance can provide your loved ones with a financial payout after your death. &nbsp;</li></ul><h2>How to create an estate plan &nbsp;</h2>To create an estate plan, you should first take the time to consider your wishes. Ask yourself: What do you want to happen to your assets after your death? Who do you want to benefit from your estate? Once you have thought about this, you can start to put together your plan. &nbsp;It is important to seek professional advice when creating an estate plan. A solicitor or professional planner can help you to understanding your options and creating a personalised plan that meets your needs. &nbsp;<h2>Estate planning tips &nbsp;</h2>Here are some more estate planning tips if you're a UK resident: &nbsp;<ul><li>Make a will.&nbsp;Doing this is the most important thing you can do to ensure that you distribute your assets the way you want. &nbsp;</li><li>Consider setting up a trust.&nbsp;A trust can be a useful tool for protecting your assets and minimizing inheritance tax. &nbsp;</li><li>Appoint a power of attorney and a healthcare proxy.&nbsp;This will ensure that someone you trust is able to make decisions on your behalf if you become unable. &nbsp;</li><li>Purchase life insurance.&nbsp;This can provide your loved ones with a financial pay-out after your death. &nbsp;</li><li>Keep your estate plan up to date.&nbsp;You should regularly review your plan to ensure it reflects your current wishes and circumstances. &nbsp;</li></ul><h2>Inheritance tax &nbsp;</h2>The current inheritance tax threshold is £325,000. If your estate is worth more than this, your beneficiaries must pay inheritance tax on the excess amount. &nbsp;There are a number of ways to reduce inheritance tax liability, such as setting up a trust or making charitable gifts. If you are concerned about inheritance tax, read our <a href="https://www.aventur.co.uk/blog/inheritance-tax-what-you-need-to-know">Guide to Inheritance Tax</a>. &nbsp;<h2>Conclusion &nbsp;</h2>Proper estate planning ensures the distribution of your assets according to your wishes. If you don't have a plan, you can make one yourself or get help from a professional to create one.&nbsp; Our team are experienced in creating estate plans for all eventualities, if you'd like some help in creating yours, <a href="https://www.aventur.co.uk/contact">get in touch</a>. &nbsp;<hr>* Some forms of Estate Planning are not regulated by the FCA. Information correct at the time of publishing.

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Your Essential Guide to Estate Planning

Inheritance tax (IHT) is a complex topic, but it's important to understand the basics so that you can plan for your estate and reduce the amount of IHT you have to pay. &nbsp;This article gives an overview of IHT, and provides examples of what you, or your loved ones may be required to pay. &nbsp;<h2>What is inheritance tax? &nbsp;</h2>IHT is a tax on the estate of someone who has died, including all property, possessions, and money. The current <a href="https://www.gov.uk/inheritance-tax#:~:text=The%20standard%20Inheritance%20Tax%20rate,estate%20that's%20above%20the%20threshold.">standard IHT rate</a> is 40%. You only pay IHT on the part of your estate that's above the tax-free threshold, which is currently £325,000. &nbsp;You can read our <a href="https://www.aventur.co.uk/blog/your-guide-to-estate-planning">Guide to Estate Planning</a> to find out more about IHT and how you can prepare your estate. &nbsp;<h2>Who has to pay inheritance tax? &nbsp;</h2>Not everyone has to pay inheritance tax. If the value of your estate is below the £325,000 threshold, then you won't have to pay any IHT. &nbsp;However, if the value of your estate is above the threshold, then you may have to pay IHT on the part of your estate that's above the threshold. &nbsp;<h2>Who is exempt from inheritance tax? &nbsp;</h2>There are a number of people who are exempt from inheritance tax, including: &nbsp;<ul><li>Your spouse or civil partner &nbsp;</li><li>Charities &nbsp;</li><li>Community amateur sports clubs &nbsp;</li><li>Certain trusts</li></ul><h2>What are the IHT allowances?</h2> In addition to the £325,000 nil-rate band, there are a number of other allowances that can reduce the amount you have to pay. These include: &nbsp;<ul><li>The residence nil-rate band: This is an additional £125,000 allowance that can be used against the value of your main residence. &nbsp;</li><li>The agricultural property relief: This is a relief that can be claimed on the value of agricultural property. &nbsp;</li><li>The business property relief: This is a relief that can be claimed on the value of business property. &nbsp;</li><li>The rules around inheritance tax are complex and can change, so it is essential to stay up to date. &nbsp;</li></ul><h2>How is inheritance tax calculated? &nbsp;</h2><a href="https://www.aventur.co.uk/blog/inheritance-tax-what-you-need-to-know">Inheritance tax</a> is calculated by multiplying the value of the estate above the nil-rate band by the IHT rate. For example, if the value of your estate is £700,000 and you are not married or in a civil partnership, then you will have to pay IHT on £200,000 (£700,000 - £325,000 – £175,000).&nbsp; &nbsp;The current IHT rate is 40%, so you will have to pay £80,000 in IHT. This calculation includes the residential nil-rate band allowance. &nbsp;<h2>Ways to reduce inheritance tax</h2> There are a number of ways to reduce the amount of inheritance tax you have to pay. These include: &nbsp;<ul><li>Making gifts to your family and friends before you die. &nbsp;</li><li>Making a will and leaving your estate to your spouse or civil partner. &nbsp;</li><li>Using the residence nil-rate band and the agricultural property relief. &nbsp;</li><li>Setting up a trust. &nbsp;</li></ul><h2>Conclusion</h2>&nbsp;Your estate is a reflection of your life and your values, so it is important to plan for inheritance tax early. Through careful planning you can be prepared and reduce your IHT liability and ensure that your loved ones inherit your assets as intended. &nbsp;If you’re not sure where to start and want to understand your options, <a href="https://www.aventur.co.uk/contact">get in touch with our team</a> who can help you understand and make the right decisions for your estate. &nbsp;<hr>*The Financial Conduct Authority does not regulate Inheritance Tax Planning or Estate Planning. Information correct at time of publishing.

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Inheritance Tax: What You Need to Know

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Estate Planning