Estate planning is more than just writing a will—it’s about having a solid plan in place that ensures your loved ones are protected, your wealth is preserved, and your wishes are respected.

Whether you have a modest estate or complex global assets, having a clear, legally sound plan ensures that what matters most to you is handled in line with your wishes.

This guide breaks down the fundamentals of estate planning. We will cover why it matters, the key estate planning tools and how to begin creating a plan.

Estate Planning: The Key Points

1. It is the process of legally organising how your assets are distributed
2. A solid estate plan can include wills, trusts and powers of attorney
3. Proper planning can help reduce taxes, avoid probate and protect your loved ones
4. An estate plan can be tailored to those with special requirements, such as expats and high-net-worth individuals (HNWIs)
5. Common mistakes include not updating your plan and ignoring digital or cross-border assets

The Benefits of Estate Planning

A common misconception is that estate planning is only for the wealthy. In reality, having a wealth transfer planning strategy can provide significant benefits for nearly everyone.

Anyone with loved ones, property, or assets they wish to pass on should have a plan in place to ensure a smooth transition. Without one, the courts will make those decisions for you.

However, a significant number of people still put their estate plans on the back burner. A report found over half (53%) of UK adults had not informed anyone of their wishes regarding their estate.

Why Estate Planning Is Important

• Family protection: Ensures loved ones have financial security
• Control over your legacy: Decide who inherits what and when
• Tax efficiency: Reduce or avoid inheritance and other estate taxes
• Avoid probate delays: Proper wealth transfer planning can make transferring assets much faster and smoother
• Incapacity planning: Appoint someone to make decisions if you are unable to

Key Components of an Estate Plan

There is no one-size-fits-all estate plan. It is a process that often includes several essential documents and tools designed to protect your interests and those of your family.

Some of the core elements of an estate plan include:

Trusts

Trusts help manage, protect and distribute your assets efficiently and are often used as a tool to avoid probate. Trusts are frequently incorporated into wealth transfer planning strategies as they can help you reduce your taxable estate.

Most trusts fall into one of two categories — revocable and irrevocable trusts. A revocable trust allows you to change the trust while you are alive, while an irrevocable trust does not.

There are several different types of trusts. Some of these include:

• Bare trusts: The designated beneficiaries have access to the assets in the trust once they reach a specified age
• Discretionary trusts: Trustees have full discretion over how to distribute income and capital
• Interest in possession trust: The beneficiary has access to income from the trust but not the assets that generate the income
• Avoid probate delays: Proper wealth transfer planning can make transferring assets much faster and smoother
• Mixed trusts: Combine elements of various kinds of trusts

Will

A will is different to a trust and is one of the most common estate planning documents that outlines your final wishes. For example, how assets should be distributed and who will be responsible for caring for your children.

Power of Attorney

Power of attorney (POA) is legal documentation that appoints someone to handle financial/legal decisions if you’re incapacitated.

There are three main types of POA. They are:

1. Financial power of attorney: those responsible for financial decisions
2. Medical power of attorney: those responsible for healthcare decisions and other medical decisions
3. Durable power of attorney: grants broad authority to make financial, medical and legal decisions

Will

A will is different to a trust and is one of the most common estate planning documents that outlines your final wishes. For example, how assets should be distributed and who will be responsible for caring for your children.

Power of Attorney

Power of attorney (POA) is legal documentation that appoints someone to handle financial/legal decisions if you’re incapacitated.

There are three main types of POA. They are:

1. Financial power of attorney: those responsible for financial decisions
2. Medical power of attorney: those responsible for healthcare decisions and other medical decisions
3. Durable power of attorney: grants broad authority to make financial, medical and legal decisions

Life Insurance

Life insurance is a key component of legacy planning. A policy offers financial security for your loved ones when you are gone.

There are two common types of life insurance:

1. Whole of life insurance: provides cover for your entire life and pays a guaranteed lump sum.
2. Term life insurance: provides cover for a specific period, known as a term. A death benefit is paid out if you die within this term.

An attractive option for high-net-worth individuals (HNWIs) is indexed universal life (IUL) insurance.

IUL insurance offers more flexibility than other products on the market and provides lifetime coverage. It combines a death benefit with a cash value component.

The cash value portion of the policy has growth potential as it is invested in a major stock market index, such as the S&P 500.

Healthcare Directive

A healthcare directive is another legal document that details your medical care preferences.

Estate Planning for Tax Efficiency

Estate taxes, such as inheritance tax (IHT), can significantly reduce the value of your estate. Fortunately, there are strategies you can use to lower the tax burden on your heirs:

• Gifting: Giving a gift to friends and family while you are alive. There is an annual limit to how much you can give away each tax year. Be aware that a gift tax applies to gifts made three to seven years before you die.
• Trusts: Putting assets in a trust can help distribute wealth strategically. Assets in a trust may not count as part of your estate when you die. This can help lower your estate tax bill.
• Exemptions: Assets left to a spouse or charity are exempt from Inheritance Tax (IHT).

Resource: Download our free Understanding Inheritance Tax in the UK guide.

Tax rules vary based on your location and asset size, so it is important to work with a professional.

How Much Does Estate Planning Cost?

The cost of an estate plan can vary. And while you can take a do-it-yourself approach to estate planning, expert guidance offers peace of mind—especially for complex estates.

What Affects the Cost of Estate Planning?

1. The type of services you need
2. Estate planning attorney fees
3. The complexity of your estate
4. Number and type of estate planning documents needed (wills, trusts, etc.)

It’s essential to understand the costs upfront based on your situation and needs. That way, you avoid any surprise fees later down the line.

Estate Planning Summary

Estate planning is one of those things we often put off. Research found that only 28% of UK adults have a will, with nearly a fifth thinking they do not need one.

Acting now can help ensure that your final wishes are honoured and that your loved ones have financial security.

The earlier you start, the more control you will have over the outcome. Whether you begin with a basic will or engage a full team of professionals, the important thing is to start.

Holborn Assets is a leading award-winning financial services provider. Alongside our legal partners, we provide a comprehensive range of estate planning services tailored to your specific needs and goals.

Be prepared for whatever tomorrow brings. Book a free, no-obligation meeting and learn how we can help you.

To learn more about Holborn and why clients from around the world choose us, download our free brochure.