What Are the Benefits of Estate Planning

When most people hear the term estate planning , they assume it's only for the super wealthy or older people. But that's far from the truth.

Estate planning is for anyone who wants to protect their loved ones, plan for the future, and make sure their wishes are respected.

In this article, we'll look at the benefits of estate planning, whether you want to start planning or are thinking about updating your plan.

Quick answer: key benefits of estate planning

Don't have time to read the full article? Here's a quick list of the biggest advantages of estate planning:

• Ensures your assets go to the right people

• Reduces family stress and legal disputes

• Helps avoid or streamline probate

• Minimises estate and inheritance taxes

• Protects children and dependents

• Supports charitable giving and legacy planning

Let's take a closer look at estate planning and explore these benefits in more detail.

What is estate planning?

Estate planning is the process of getting your legal and financial affairs in order so that your wishes are followed when you die or if you become unable to make decisions for yourself.

An estate plan typically includes:

• A will and other legal documents in the country where you hold assets

• One or more trusts

• Life insurance policies

• Powers of attorney

• Advance healthcare directives

• A plan for guardianship (if you have children)

Why is estate planning important?

One of the main goals of an estate plan is to ensure that your assets are distributed as you intended. If you don't have a will, your assets may be distributed according to local laws.

Worse still, your family could face delays, legal costs, and emotional stress during an already difficult time.

If a will is contested, it can take months or even years to resolve, depending on the estate's complexity. Even simple estate disputes can add six months to the process.

To summarise, estate planning offers you control, clarity, and peace of mind.

In detail: what are the benefits of estate planning?

We glanced over the key estate planning benefits earlier. Now, let's look at those in detail.

Control over your assets

One of the biggest reasons people create an estate plan is to decide who gets what after they're gone. An estate plan gives you complete control over your legacy, meaning your assets are distributed as you intended.

Saves time and legal costs

If you are wondering, 'Why do I need an estate plan?' the answer is simple: less hassle, less expense, and less stress for your loved ones.

Most estates go through probate. Some key points to know about probate are that it can be a lengthy process, it's public, and it can be expensive. However, setting up a trust can help you avoid probate altogether.

A trust is a legal structure that manages your assets and distributes them based on your instructions. Also, trusts typically avoid probate if set up correctly.

Various types of trusts exist, so speak with an expert to understand which option is right for you and your family's needs.

Reduce estate taxes

Estate planning can help reduce or eliminate tax liabilities through:

• Gifting strategies

• Trusts

• Charitable donations

• Inheritance tax planning

The last one is especially important for those with large estates and expats. In the UK, you can check if inheritance tax is due on an estate and how much by using the online tool at GOV.UK .

Intestacy

One of the primary benefits of estate planning is that it enables you to put pieces in place, ensuring you remain in control of your legacy.

If you die without a will or trust , the courts will likely decide how to divide your assets based on the rules of intestacy. However, avoiding having the courts make decisions on your behalf is simple with the right planning.

Be aware that if you live abroad, you may also need a second will as your UK will may not be valid overseas .

Protect children and dependents

If you have minor children or dependents, estate planning is essential as it allows you to protect their future, even when you're not around.

It allows you to:

• Appoint a guardian for your children

• Set up trusts to manage their inheritance

• Make sure vulnerable loved ones are cared for long-term

• Avoids beneficiary dilution if a surviving partner were to remarry

Supports charitable giving

Another advantage of estate planning is that you can leave a legacy that truly makes a difference. It can also make you more tax-efficient.

Any money left to charity is deducted from the value of your estate. If you leave 10% of your estate to charity, your inheritance tax rate could be reduced from 40% to 36%.

Business continuity

Estate planning is essential for business owners to safeguard what they've built. Having a business estate plan allows you to:

• Lay out a succession plan (which ensures your family benefit from the years of hard work put into building and running a business)

• Protect your partners, employees, and customers

• Keep your company running smoothly

Repatriation

A correctly drafted will can protect assets from being brought within the scope of the Local Authority means-testing assessment.

This is especially important if wealthy individuals eventually return to jurisdictions like the UK, where the costs of care are the individual's responsibility and are costly.

Peace of mind

This last one is less of a benefit of estate planning and more of a byproduct of it.

Knowing that everything is in order and that your loved ones are taken care of can provide peace of mind. And that is invaluable.

Who should create an estate plan?

The short answer: almost everyone. You should create an estate plan if you have:

• Any assets you would like to leave

• Dependents, such as children

• Specific wishes about medical or end-of-life care

If any of these apply, you should have at least a basic estate plan in place.

When should you start estate planning?

Estate planning is about making sure your loved ones are cared for, your wishes are honoured, and your legacy is protected. The best time to start planning is right now.

You don't need to wait until you're older or wealthier. A simple will and power of attorney are a great starting point—and you can (and probably should) update your plan as life changes.

Remember, as with other financial plans, you should periodically review your estate plan to ensure your documents remain valid and continue to meet your needs.

If you are ready to take the first step, we can guide you through your estate planning journey. Contact Holborn Assets today to learn how we can help you.

Financial planning with Holborn?

Holborn can help you make way more money than you have now.

Get started