Effective estate planning is essential if you have clear wishes and desires about how your assets and investments are treated after your death. Here’s what you need to know about estate planning and some of the most common questions that get asked about this complex area.
What is estate planning and why does it matter?
Effective estate planning makes it easier for your loved ones to handle your estate after your death. Estate and trust planning can ensure that estates are protected for beneficiaries and can limit the amount of inheritance tax that must be paid on them.
Who can help with estate planning?
A London law firm, such as //www.forsters.co.uk/, handles estate planning, will creation, trust set-up, and more, for a full wraparound service.
Why estate plan?
There are many benefits to getting an estate plan in place. For example, good estate planning can protect your finances for loved ones after you die, minimise inheritance tax obligations, set up wishes for charitable donations, control who will or will not get access to assets, and split up estates among beneficiaries. Estate planning also gives you peace of mind that your wishes are respected after your death and prevents your estate from becoming subject to legal challenges.
What is the process of estate planning?
It will begin with making a will, letting the executor know their role, and informing family and loved ones that you have a will in place. It may also include setting up a Lasting Power of Attorney and writing an estate plan, plus setting up any trusts.
How a deed of trust works
A trust is often part of an estate plan. It is created when the owner of an asset, known as the settlor, legally transfers ownership into the trust. Trustees then manage it according to the settlor’s wishes and the terms of a trust deed, for the benefit of the beneficiaries. These deeds are also called declarations of trust and are commonly used to set out how property is held by joint owners.
Property is not the only asset that can be placed in a trust. Land, cash, securities, pensions, life insurance, investments, shares, personal items and luxury assets such as cars and yachts can all be included. It is normal to have a solicitor draft the deed and set up the trust, and a solicitor can also act as a trustee.
Trustees handle taxes, banking and distributions. An independent trustee is not required, but it is good practice because it avoids the bias that can arise when only family or friends are involved. A protector can also be appointed to make sure trustees carry out their duties. The trust deed itself is legally binding, protects everyone’s interests and governs what the trustees can do.