In 2020, research from the Law Society found that 59% of people did not have a will in place. 18% did not have one due to thinking they were too young, 20% due to not having found the time to make one yet, and 24% due to not believing they had anything of value to leave to their families.
Working out what happens to your possessions and finances when you die might seem like a task that can wait a few decades, but the consequences of dying without leaving instructions can be severe.
In this guide, we explore what early estate planning is, why it’s important, and how you can set up a solid estate plan that gives your loved ones’ security when you pass away.
Why should families consider an early estate plan?
An estate plan lays out what happens to your wealth, property developments, and valuables – when you die. An early estate plan is like any other estate plan, except one that’s made early on, long before you die.
Typically taking the form of a will, it ensures your wishes are carried out, and prevents the need for your family to rely on time-consuming and potentially costly corporation tax processes and court decisions to work out who benefits from your estate. This is called intestacy. Estate planning can also involve purchasing good insurance and setting up trusts which protect funds for children before they come of age.
Without early estate planning, your estate may end up not being shared the way you want it to be if you suddenly pass away – money being given to your children, for example. According to Citizens Advice, if the value of the estate is below £270,000 and there is a surviving partner, the deceased’s children will automatically receive nothing. You can see who would inherit your estate using the government’s intestacy tool.
How to set up the right estate plan?
Given how important early estate planning is, it can be a good idea to enlist the help of estate planning experts. These professionals understand the legal processes involved and the best possible way to divide your funds – including aspects of your estate that might change in the meantime.
When setting up an estate plan, you need to consider the following:
Understand your estate
Work out what your estate comprises – such as property, valuables, money, and other finances.
Who do you want to benefit from your estate when you die?
Plan the division of the estate
What would you like each beneficiary to receive?
If you are leaving part or all of your estate to children, consider setting up a trust to protect and control the funds until they turn a certain age.
Take out life insurance
Paying out a large sum when you die, life insurance can ease the burden on your family during a difficult time.
Make a will
Comprising all the previous considerations, a will codifies your wishes and provides peace of mind.