What Is Estate Planning?

Probate 21/09/19 | Superadmin

Estate planning is a general term that refers to the process of preparing for the management of your assets in the event of your death. It can encompass things like preparing documentation (such as a will), valuing your estate, and granting powers of attorney to the relevant parties. The purpose of estate planning is to ensure that in the event of your death or loss of mental capacity, there are measures in place to ensure that your Estate is administered as efficiently as possible.

Let’s take a look at some of the elements of estate planning.

Creating A Will

The most important part of estate planning is arguably the creation of a valid will. The will determines who gets what, and in what proportions. But there’s more to creating a will than naming beneficiaries: you should also name executors – people who will carry out the will on your behalf.

Wills are sometimes challenging to get right which is one of the main reasons why people use estate planning solutions. These services ensure that the will accurately reflects the wishes of the owner and that it meets all legal requirements.

Your will can also contain additional information, such as who will look after children under the age of 18 in the event of your death. It can also specify secondary beneficiaries just in case your primary beneficiaries predecease you.

Valuing Your Estate

Estate planning also involves valuing your estate – the total value of all your assets, minus liabilities.

You may own a range of assets including property (such as a house, a flat, a business unit, or land). You may have money in current and savings accounts. You may also own investment products, such as shares in public or private companies, exchange-traded funds, accounts with mutual funds, or real estate investment instruments. Finally, you may own other tangible assets with value, such as wine, jewellery, art, or motor vehicles.

Estate planning aims to estimate the value of your assets using realistic reselling prices at market value. Because the value of assets change over time, determining a true expected value of your estate can be a challenge requiring the help of professionals.

The next step is to calculate the value of your liabilities. In essence, liabilities constitute money that you owe to other people. Loans, mortgages, outstanding utility bills, overdrafts and unpaid tax are all deemed liabilities.

The final value of your estate is calculated by subtracting the current value of your liabilities from the estimated market value of your assets.

Of course, these values can and will change over time, so it is also important to consider future changes such as inheritance from relatives or changes in finances. For this reason is usually a good idea to revisit from time to time.

Granting Powers Of Attorney

There may be circumstances in the future where you no longer have the mental capacity to administer your affairs. In anticipation of these situations, it’s common for a person to grant lasting powers of attorney (LPA). An LPA gives a trusted person the authority to manage your financial affairs on your behalf, should you find yourself unable to do so or should you wish for them to do so e.g. if you struggle to get to and from appointments.

Managing Trusts

Trusts are a way for beneficiaries to manage an inheritance. Trusts are held by third parties and subject to specific conditions on who can get what and when. Trusts can sometimes provide an alternative to direct transfer of the estate or inheritance for example managing a fund on behalf of a young or vulnerable beneficiary, or allowing someone to live at a property without giving them full ownership.

Contact Us to see how We can help

Philips Trust provides guidance and support on a wide range of estate planning and trust administration matters. Complete contact form, give us a call or use the online chat to speak to one of our professional advisors.

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For the answer to this and many other questions about estate planning, head over to our service pages or contact us

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