Practical advice & guidance in estate planning for you and your family

Estate Planning – Sadly, there are only two certainties in life – death and tax! Neither are things we like to think about. But when it comes to a combination of the two, we give this even less thought. What we’re referring to is Inheritance Tax (IHT).

Estate Planning - Practical Advice and Guidance for you and your family

You might have heard the expression “stealth taxes”, so called because they go relatively unnoticed. Well, inheritance tax is possibly the stealthiest of all (especially in the realm of estate planning); that’s because it is a tax bill which can potentially grow each year, with the final total not being known in your own lifetime – a pretty scary prospect. That’s why taking professional advice on Estate Planning is so important.

What is Inheritance Tax?

It might help to first ask what is an estate? An estate is a person’s net worth, i.e. the sum of their assets including money, property and possessions. When someone dies, the executors of the will are responsible for collecting all these assets, paying off any debts and distributing the remainder of the estate to the beneficiaries of the will. The “debts” to be paid-off include paying any Inheritance Tax.

Inheritance Tax is paid on an estate when somebody dies. For UK residents there are currently 2 thresholds subject to Inheritance Tax which are:

  • £325,000 for a single person
  • £650,000 for a married couple or civil partnership

If an estate exceeds these thresholds, you may be liable for Inheritance Tax of 40% of the excess. Like most types of tax, it includes various complexities dependent on individual circumstances. The best starting point is to make sure you have an up-to-date will in place as well as taking advice from a highly-qualified Estate Planning Adviser.

What does this mean?

You might think this is something that won’t affect you, but circumstances can change quickly and unexpectedly. Plus of course tax legislation is always subject to change. You may or may not have already given some thought to (when considering your estate planning) who you would like to be beneficiaries of your will after your death; isn’t it also worth giving some thought to how much of your hard-earned money might be left after the tax man has taken his share?!

At Octagon Financial Services we are able to advise you on the various options available to you in your estate planning. For instance, there are a number of things you can do to reduce your potential Inheritance Tax bill, including:

  • Gifting money to your dependants during your lifetime.
  • Putting existing Life policies in Trust.
  • Taking out a Whole of Life Insurance policy, offsetting any potential IHT and providing a cash lump sum on death.

This is a growing product area within financial services which means there are more and more options available to you than ever, so. By sitting down with a professional Financial Adviser you can explore these to see how they can help you in your particular circumstances. Why risk throwing away all that hard earned money when seeking professional advice could save you thousands?!

What is a Lasting Power of Attorney?

A Lasting Power of Attorney (LPA) is a way of giving someone you trust (known as the attorney) the legal authority to make decisions on your behalf if you are no longer able to make them yourself, or if you no longer wish to make estate planning decisions for yourself. There are 2 types of LPA:

  • For financial decisions
  • For health and care decisions

One of the most common reasons our clients ask for help with an LPA is because a family member no longer has the mental capacity to make their own decisions; it is a sensitive and emotional subject which needs handling with discretion and respect. We can give practical advice and guidance on why you might consider an LPA, how to appoint an attorney and also explain what powers you can give them so you can decide what is the right decision for you and your family.

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The Financial Conduct Authority do not regulate wills, trusts or estate planning.