The changing state of estate planning

June 2018

Changing state of estate planning

Barry Crawford - Private Client Adviser  
Barry Crawford    
Origen Private Client Adviser                     

Financial planning can quickly evolve; as regulation and tax changes, we often see new challenges arise which may bring into question existing arrangements. Barry Crawford guides you through some options for protecting the value of your estate for your chosen beneficiaries, which you should discuss with your Adviser.


1.       Wills – Around 60% of adults in the UK do not have a Will. Although this falls for people above age 55 to 36%, it does essentially mean that you are leaving the division of your estate to the Rules of Intestacy (Administration of Estates Act 1925) which are unlikely to match your own wishes. In particular, in the event of divorce or remarriage with children, intestacy rules can lead to family complications. You can also reduce your rate of Inheritance Tax from 40% to 36% by including a donation to charity in your Will of at least 10% of your estate.

If you have set up a Will, your task is not complete. It is vital that you review this regularly to ensure that it still reflects your wishes. Your circumstances and financial worth can change significantly over a short period of time especially around changes of employment, so a Will review should never be neglected. Above and beyond your finances, a Will is essential for appointing guardians and providing financial security for minors. So regardless of your age, having a Will in place should be a cornerstone of your planning, especially if you have children.

As a general rule, your Will should not stipulate where any pension death benefits are directed, this is covered by an Expression of Wish form which is available from your pension provider or, in the case of a Final Salary pension, your scheme administrator. You should ensure that all of your pensions have an up to date Expression of Wish otherwise benefits may pass to an ex-spouse or only to children who were alive when this was last reviewed.

Another item to consider is to use a Letter of Wishes for personal item bequests rather than stating these in the Will as the contents of the Will are legally binding whereas the Letter of Wishes is not – for example leaving your Rolex watch to a relative in your Will would result in the Executors having to purchase a Rolex if yours cannot be found.


2.       Powers of Attorney – Like a Will, Powers of Attorney are very useful in helping beneficiaries manage your finances and health wishes in the event of you no longer being able to do so. There are two main types in England – Ordinary and Lasting – with the key difference being whether they can be used once you have lost capacity to make your own decisions.

The key is to act before it is too late. Put plans in place in case they are needed as otherwise your friends and family will need to go through the Courts to manage your finances which can result in delays and avoidable distress. So don’t wait until you are no longer able to make your own financial decisions, as then it is too late. With life expectancy increasing, ill health is a growing concern for financial planning.

Example:  Mr Smith is 67 and married and they use his pension drawdown fund to cover their expenditure by making withdrawals every six months. Unfortunately, following a serious car accident, he is unable to give any instructions and the pension provider cannot take instruction from anyone else.  The delays in accessing any income add to the distress and pressure his family are facing. With a Power of Attorney each to cover ‘wealth’ and ‘health’, Mr Smith could have authorised his wife or children to act on his behalf in the event of his incapacity. 


3.       Trusts for Inheritance Tax planning – A core part of estate planning is using Trusts to remove assets from your estate for Inheritance Tax purposes. However, trust arrangements need reviewing as rules change and planning strategies evolve. For example, prior to 2007 it was common practice to include a ‘nil rate band’ trust within your Will.  Since the transferrable nil rate band has been introduced this planning may no longer be required, and since the Residence Nil Rate Band came in to effect, it could even increase the amount of tax your estate will pay.

Careful Estate Planning is a key part of financial planning and neglecting this area or failing to review existing arrangements can undermine the best financial plans.  Careful financial planning helps to provide you with reassurance and protect your family and chosen beneficiaries.


Make sure that you ask your Origen Adviser to review estate planning arrangements to check that you have the right arrangements in place and that they are suitable for current legislation.


This article is for information only and is not to be taken as Financial Advice.

CA2685 Exp. 06/19


[ Date Posted: 28/06/2018 15:28:12 ]