The correct estate planning solutions will depend on many factors:
Your age may influence what estate planning is right for you. For example, someone under the age of fifty may find it easier and more affordable to insure against their life rather than create a family trust structure. However, if their wealth were considerable, it may be that insurance is not appropriate due to cost and because it may take longer to plan with sizeable wealth.
It may be that there is a history of health problems within the family that materialise around an age bracket. You may be inclined to start planning in case you are also the subject of those health problems.
It may be that intended beneficiaries have health concerns and they are not capable of having responsibility over their financial affairs. In this situation independent trustees may be the solution.
It may be a nice problem: your assets may be so significantly valuable that passing them on utilising reliefs available may take a long time.
Alternatively, you may not hold significant wealth although an opportunity exists that could change that position. Your assets may be currently low in value and you expect them to grow considerably. It could be simpler to manage structuring family wealth whilst the assets are low value.
There may be many other factors affecting how you undertake estate planning. Theses factors also change over time so it is important to at least have a regular discussion about your plan and ongoing options.
Does your family fall out at weddings and funerals? The dynamics of families change depending on each member’s circumstances. It may be that giving outright wealth to family members may not be appropriate if, for example, the member is on the seventh marriage and has children from each marriage as well as out of marriage!
Your children may not be legally able to hold assets in their own name and you may not wish them to receive wealth until they attain a certain age. A child may be a ‘vulnerable person’ requiring a vulnerable person’s trust.
When you marry, your desire to structure your affairs will most certainly alter. They may also alter if you separate and divorce. It may be that you are more inclined to protect assets for children than former spouses. You may also wish to protect assets passing to your children should they marry or divorce.
If you are non-UK domiciled for inheritance tax purposes, you may be able to hold assets in excluded property settlements to prevent inheritance tax arising on them. The spouse exemption is limited to £325,000 – unless the surviving spouse makes an election to be treated, for inheritance tax purposes, as domiciled in the UK, where
- a UK domiciled spouse dies leaving the estate to a non-domiciled spouse who is not yet deemed domiciled
- a deemed domiciled spouse for IHT purposes dies leaving the estate to a non-domiciled spouse who is not yet deemed domiciled
Planning may be different depending on the assets you hold. For example, if you hold business or agricultural property, it may be that these could be used to establish a trust without a lifetime charge to inheritance tax. Often considerable wealth is accumulated with property ownership and putting these into a company and undertaking planning with the company shares may be more appropriate that giving away interests in each property. If pure investment assets are held, it may be appropriate to look at whether for a period, inheritance tax friendly investments could be acquired. This may be to help facilitate direct gifts or gifts into trusts.
There may be many other factors affecting how you to find the right estate planning solutions. Theses factors also change over time so it is important to at least have a regular discussion about your plan and ongoing options.