Your financial toolbox should be filled with plans, investments, and protection policies all designed to help build, protect, and preserve your wealth. Estate planning is one of your essential tools. A well-thought out estate plan covers your loved ones in the event that the unthinkable happens and your family permanently loses any financial support after your death.
In this two-part series, we’ve already covered the three pillars of wealth protection: Income Protection, Critical Illness Cover, and Life Insurance. In this follow up, we’ll focus on Estate Planning.
Read on for an overview of the elements of an estate plan and how they can help you achieve peace of mind for the future.
There are three places your assets can go upon your death: to your family and friends, to charity, or to the government in the form of taxes.
Planning your estate allows you to establish exactly who gets what, how they get it, and when they get it. Because these decisions, along with life events and economic factors, can have significant financial implications, it is important to review your estate plan and adjust your wishes after any major changes.
Writing a Will
Think of your will as a living document that you always need to keep up to date.
The way to ensure that your hard-earned savings and assets are distributed amongst your loved ones the way you want is to write it down in a will. Any time there’s a major life event — like getting married or divorced, expanding your family, etc. — you should revisit and revise your will.
Lasting Power of Attorney (LPA)
Whoever you assign Lasting Power of Attorney is tasked with carrying out your wishes when it comes to your property and financial affairs, as well as your health and welfare. It’s important to make your selection for LPA while you’re still around and in good health, so whoever you choose to represent you and execute your wishes after you die knows exactly what you want to happen.
A major incentive to estate planning? Saving your family from a potentially massive Inheritance Tax (IHT) bill after you pass.
IHT is calculated against the value of your remaining assets over the amount of £325,000 — including property, possessions, and savings and is paid after death. The good news is that there are ways to reduce your IHT liability, like fully utilising your own allowance or spousal transfer of nil band so it’s important to include inheritance tax when building your estate plan.
Trusts essentially let you give away assets while still retaining a degree of control over them. Strategically using trusts helps you ensure that your family, friends, and loved ones will benefit entirely from the inheritance you want them to receive. Plus, trusts also protect your assets from the costs of long-term care, so don’t forget to include them in your plan.
Don’t ignore this essential part of a financial plan
As a busy medical professional, don’t let lack of time stop you from planning – especially if you’re the main earner in your family. Get in touch with an independent financial adviser who can help you prioritise your wealth preservation goals and aid in the process of setting up an estate plan so you can plan for the future and still meet your financial goals.
Is it time to review your financial protection plans?
If you know you would need some other way to keep paying the bills if you unexpectedly lost your income, review your options and get in touch with an independent financial adviser so they can help you to prioritise coverage and select the right policies to help you meet your financial goals.
Contact Darren Scott-Guinness, Dental and Medical Financial Services financial expert for a free no-obligation consultation to help you get started today.
This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice. Dental and Medical Financial Services is an appointed representative of Best Practice IFA Group Limited, which is authorised and regulated by the Financial Conduct Authority.