You’ve worked hard for what you have. It’s only natural to want your family to benefit from it and to make sure as much of your wealth as possible reaches the people you care about.
Planning how your money and possessions are passed on is one of the most thoughtful things you can do. A clear plan can give your loved ones security and give you confidence that everything is taken care of. Yet for many people, estate planning feels overwhelming. Wills, pensions, trusts and tax rules can sound complicated, and it’s not always clear where to start.
The good news is that with the right guidance, estate planning can be far simpler and more reassuring than you might expect.
Writing a Will
A Will is the foundation of any estate plan. If you pass away without one, you are said to die ‘intestate’. In this situation, your money, property and possessions are divided according to fixed legal rules. These rules do not take your personal circumstances or wishes into account and can lead to outcomes you may not have wanted.
By writing a Will, you remain in control of who inherits your estate and help ensure your assets pass smoothly to the right people. It can also reduce delays and stress at an already difficult time for your family. Even if you already have a Will, it’s worth reviewing it regularly to make sure it still reflects your wishes.
Using trusts to protect and control wealth
Trusts can seem complicated at first, but at their heart they are about protection and control.
A trust is a legal arrangement that allows you to set out who can benefit from certain assets and when. They are often used to protect family wealth, support children or grandchildren, or help care for someone who may not be able to manage their own finances.
In some cases, Trusts can avoid probate and allow assets to be managed and distributed over time rather than all at once. For families with more complex needs, trusts can provide reassurance that wealth will be used exactly as intended.
Life insurance written in trust
Life insurance can provide a valuable cash lump sum to your loved ones if you pass away during the term of the policy.
Although life insurance payouts are usually free from income tax and capital gains tax, they can still be subject to inheritance tax if they form part of your estate. This is where writing a policy in trust can make a real difference.
When a policy is written in trust, the payout is usually kept outside your estate. This means the money can often be paid more quickly and with less paperwork, helping your loved ones at a time when they may need it most. It can be particularly helpful if you are not married or in a civil partnership, or if speed and certainty are important to your family.
Pensions and estate planning
Pensions have traditionally been a very tax-efficient way to pass on wealth.
At present, if you die before the age of 75, your pension can usually be passed on to your beneficiaries tax-free. Because of this, pensions have played a key role in many estate plans. However, changes expected from April 2027 mean pensions are likely to be treated more like other assets for inheritance tax purposes.
This makes it especially important to review how your pension fits into your overall plans. It’s also worth remembering that pensions do not normally fall under your Will. Instead, you complete an Expression of Wish form to tell the pension provider who you would like to benefit. While providers usually follow these wishes, they are not legally binding, so keeping them up to date is essential.
Understanding inheritance tax
Inheritance Tax is charged on the value of an estate above certain thresholds.
In many cases, no inheritance tax is due if your estate is worth less than £325,000 or if everything above this amount is left to a spouse, civil partner or a charity. Where the value of an estate exceeds the available allowances, inheritance tax is usually charged at 40 per cent on the excess.
For example, an estate worth £700,000 with a £325,000 allowance could face a tax bill of £150,000. For couples, unused allowances can often be passed on, potentially increasing the total tax-free amount available.
Inheritance tax planning is rarely straightforward. The right approach depends on your personal circumstances, your family and how you want your wealth to be used. Our blog covers the subject in more detail.
Gifting money during your lifetime
Many people choose to pass on some of their wealth while they are still alive.
Each tax year, certain gifts can be made without triggering inheritance tax. If gifts exceed these allowances, they may still become tax-free if you live for seven years after making them. If you pass away sooner, tax may apply, although this reduces on a sliding scale after the first three years.
Gifting can be a powerful way to reduce the value of your estate and support your family, but the rules are detailed and mistakes can be costly. Taking advice before making larger gifts can help you avoid unintended tax consequences.
Estate planning is about far more than tax. It’s about clarity, confidence and looking after the people who matter most to you.
With the right support, you can put plans in place that protect your family, reduce unnecessary tax and give you peace of mind, while still enjoying life today. Because laws and personal circumstances change, regular reviews are just as important as getting started.
A lasting legacy isn’t just about the wealth you leave behind. It’s about knowing you’ve done the right thing for your family.
