Estate planning

Nick Rolf discusses estate and legacy planning: from writing a will to setting up a trust to minimising inheritance tax, here are the building blocks of an efficient estate plan.

Death remains for many still a taboo subject, but estate planning is about leaving your money, property and possessions to your loved ones when you die. It’s worthwhile tackling it head-on and making provision for what happens to your finances after you have gone. Doing so will minimise uncertainty and stress at a difficult time. And with careful planning, you might also be able to reduce tax on your estate.

We are living longer and the idea of what constitutes a typical family is becoming increasingly complex. So it's important to think about priorities and to give consideration to who inherits what.

Our assets are also more complicated. We used to have a house that we had been in for decades and a single pension from a “job for life” but even that is changing dramatically.

Talk to your family

Death is never a particularly palatable conversation topic, but it makes sense to broach it with your loved ones. Doing so will remove a lot of the guesswork that will need to be done when you’re gone. Tell your family of your plans and make sure they know where important documents are kept. Consider drafting a document detailing your finances for your executor, for example. It could include “top-level” information – whether or not you have a funeral plan and whether you have taken out a life insurance policy.

Talk to us about estate planning

Such matters should form part of an overall long-term conversation with us. Needless to say, you can also get specialist financial advice from a tax accountant or solicitor with expertise in this area. Again, we know the right people.

What is your estate?

Essentially, it is everything you leave behind. Your house is usually the most valuable asset, but there are others to consider – your pension, savings, investments and physical possessions all form part of it. In today’s world, there are digital assets to think about as well, such as online savings accounts.

Where do you begin?

Some considerations are obvious, others less so. You will want to give thought to the following:

  • Who do you want your beneficiaries to be?
  • Are there any specific assets that you would like to divide up between friends and relatives?
  • Who will you task with dividing up these assets?
  • Do you want to give anything to charity?
  • How can you minimise inheritance tax on your estate?
  • How will you plan your funeral, and will it be paid for as part of the distribution of your assets?
  • If you find yourself incapacitated, have you prepared for this by putting in place a lasting power of attorney?

Here are some basic steps:

List your assets

First identify and list your assets, together with any debts (a mortgage, for example).

Your tangible assets will include your property and your possessions. Your intangible assets will include your pension, any money held in a bank or investment account and any policies that pay out upon your death. You might also wish to give consideration to your digital assets.

Make sure you update the value of your assets on a regular basis (balances in savings accounts, the value of your property, etc.). It's worth bearing in mind that some assets might have considerable sentimental value to certain people (as opposed to financial value).

Make a will

It is relatively straightforward to put together a will without any legal help. Provided you sign it in front of two witnesses (who are not beneficiaries named in), it is legally binding. Needless to say, you must be of sound mind in order to make a will. For more complex estates, it is probably a better idea to use a solicitor.

Lasting power of attorney

This grants somebody permission to make financial decisions on your behalf if you are no longer able to do so. Reasons might include (but are not limited to) developing dementia, suffering a stroke or being in a coma. They might also make decisions about the kind of medical care you would like to receive.

Under normal circumstances, only you are entitled to manage your bank accounts, property, assets and investments (unless they are held jointly). This might create problems should you find yourself unable to make decisions about your finances. Someone can be granted power of attorney to deal with all your financial affairs and property, or only certain things (paying bills, for example).

As soon as it’s registered, a property and financial affairs LPA comes into effect. However, if you do not want your attorney to make decisions about your affairs until you are no longer of sound mind, you can specify that.

Inheritance tax and gifts

It is important to know whether or not your estate plan needs to factor in an inheritance tax liability.

If your estate is worth less than £325,000, there is no inheritance tax to pay – it falls into the nil-rate band. If it is worth more than £325,000, there could be 40% to pay on everything over that threshold.

However, there is nothing to pay if you leave it to your spouse or to a charity.

If you leave your main residence to your children, that threshold could increase to £500,000. You may pass any unused allowance to your spouse when you die, meaning that your total estate could be worth as much as £1 million, and not be liable to inheritance tax.


There are other things you might want to consider if you have an estate that is liable to be taxed. One way to minimise inheritance tax during your lifetime is by giving away money (or jewellery or furniture). The caveat, however, is that you must live for seven years after gifting them.

You have an annual exemption – an amount that you can give away every year without being liable to inheritance tax. This currently stands at £3,000 – this can be gifted to one person or split between several people.

You also have a “small gift allowance”: you can give as many £250 gifts as you like, provided you have not used other allowances from your £3,000 exemption for the same person in that tax year. There is no inheritance tax payable on Christmas and birthday gifts paid for from your regular income.

It is a complex area. We would be delighted to discuss your specific circumstances with you and, if necessary, put you in touch with a tax accountant or estate planning solicitor. That way, you can prepare your inheritance plans in a tax-efficient way.

Consider setting up a trust

You could put some of your assets “in trust”. This way, somebody else will manage your assets after your death, on behalf of your beneficiaries. You may choose to put money “in trust” for your children to be managed until they are responsible enough to look after it themselves.

Trusts can help minimise inheritance tax and protect assets for vulnerable relatives – people with disabilities, for example.

Putting a life insurance policy in trust will protect it from inheritance tax. If the insurance company pays out, the money will not form part of your estate and will go directly to your beneficiaries – uneroded by IHT.

Trusts can be extremely useful, but they are complicated and involve some upfront costs. We can recommend an experienced estate planning professional who can give you the advice you need.

Review your estate planning arrangements on an ongoing basis

Major life changes can come at any time: so review your estate plan on a regular basis.  Divorce, the births of children and grandchildren, moving home and people close to you dying are just a few life events that are a reason to update your plan.

Minor amendments may just mean making a codicil to your will. This legal document detailing any amendments to your will usually costs less than writing a new will.

Remember – we are never more than a phone call away should you wish to discuss any of the points raised in this article. You can take the first steps today by making sure that all your important paperwork – wills, property deeds, insurance contracts, policy documents, valuations and statements are safe, secure and accessible (the IQ Wealth app has a facility for storing such documents). And for the next steps, we will give you the help, support and guidance you need.

Author Picture
Nick Rolf
Director of Private Clients
Nick Rolf is the Director of Private Clients at Investment Quorum. Nick supports clients with personalised financial planning and investment strategies, and also contributes to the strategic vision of the company.
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