Estate Planning During A Pandemic
The current Covid-19 pandemic has changed a lot of things in the world. In particular, it’s prompted a lot of people to do things they had been putting off for a long time (and not for very good reasons) – like getting their wills written. In fact, Coronavirus has prompted a 76% jump in demand for wills and will writing services across the UK. But why has it taken a pandemic to make so many people realise they need a will in place, and how valuable a little estate planning can be to the future of their loved ones?
Many experts think the reason is simple – that death is scary, and if you don’t think about it, then you don’t need to live with the fear. While this might be true, the reality is the frightening death tolls, along with more people than ever risking their own health to help others, having a will in place has become a necessity. An important part of writing a will is planning out what will happen with your money and belongings when you die, otherwise known as estate planning. If you haven’t thought about it before, it can seem pretty complicated. So here are a few things you should think about when estate planning during the Covid-19 pandemic.
Choosing Your Powers of Attorney
When drafting up an estate plan, there are generally 3 documents that you will need in place, which all require someone else to action on your behalf. These are a Lasting Power of Attorney (one for money and one for medical), and a will. You will need to put some careful thought into who you appoint for these roles, particularly when it comes to your Lasting Power of Attorney (LPA). An LPA only comes into effect when you lack the capacity to make decisions on your own. This could be because of something like dementia, or it could be because you are critically ill and unable to communicate, as some Covid patients have been. If this should happen, then the people you have chosen as your attorney can make decisions for you, in line with the powers you give them.
You can choose different people for different LPAs, or you could have attorneys on one document (for example, if you have 2 children), with the requirement that they both agree before an action is taken, or that one can make decisions if a professional is in agreement (usually found in medical LPAs). You can choose who you want to take on these roles and what you want them to be able to do, and while you are alive, these documents stay in effect.
Your executor for a will only comes into play after you die, and it’s their job to make sure your will is carried out accurately and your wishes are followed. Like the LPA, this should be someone you trust, but many people choose someone who isn’t family to take on this role. In fact, a lot of people choose 2 executors – one family member, and one impartial professional like a solicitor – to ensure someone impartial is involved, as emotions can run high. If you’re not sure who you should choose, we recommend you seek some professional advice.
If you run a business, then it will form part of your estate. How this is handled will depend partly on what kind of ownership you have – if you are the sole owner then this can be relatively simple, but if you own shares, or are in a partnership, then this will need some careful planning and discussion – and this is something you should definitely seek professional guidance for. Succession planning might seem like it’s a completely different ball game, but it forms an important part of estate planning for business owners.
Gift and Tax Planning
Then we have tax. Inheritance tax is a minefield, but estate planning is a great way to lower the amount of tax you pay when you die, and increase the amount of money available to leave to your loved ones. There are a number of ways you can use estate planning to maximise tax savings, from gifting money and assets that do not qualify for inheritance tax relief now, to setting up trusts to keep pots of money set aside and secure, ready for those who will need them. Gifting is also a great way to watch your loved ones enjoy part of their inheritance – but you do need to be careful about how you do it. We recommend talking to an expert about how you can utilise gifts and plan your tax efficiently, so you don’t end up paying a lot of money to the tax man.
Talk to An Expert (Virtually)
While in-person meetings are still a no-go, that doesn’t mean you can’t seek expert advice when planning your estate. A financial planner will be able to support you through this challenging topic, and help you create a plan that is unique to you, gives your family and loved ones the support you need and most importantly gives you a sense of security and peace of mind. Virtual meetings, either by video or over the phone, are a great way to talk through what your estate actually looks like, and what the best and most efficient way to handle it is. That’s something that an online write-your-own-will kit just won’t give you. Plus, once you have your estate plan in place (which is the bulk of the work), writing your will is actually quite straightforward.
At Chilvester Financial, we have experts in estate planning on hand, waiting to help you create a plan that truly reflects you and your wishes. Our job is to make sure your money goes exactly where you want it to and doesn’t all end up in the tax man’s pocket. We can also ensure your estate is tax efficient, so you can leave more to your loved ones as well. If you would like to know more about our estate planning service, or want some advice on planning your own estate, just get in touch with the team today, and we’ll be happy to help.