Reviews and Ratings for Financial adviser Chris Wheatman, Lancaster

5 crucial things you need to consider when reviewing your estate plan

If you have an estate plan, you shouldn’t simply forget about it. Instead, regular reviews can help ensure it continues to reflect your wishes and circumstances.

Sometimes you may have a specific reason to review your estate plan.

Life milestones can often cause you to reflect on the steps you’ve previously taken. Experiences like getting married or divorced, or welcoming children or grandchildren into your family may mean you need to make changes to your estate plan.

However, it’s advisable that you schedule regular reviews, not just after major life events like these.

Over time, your wishes or circumstances can gradually change; a plan that met your needs five years ago, may not be suitable now.

So, if you’re ready to review your estate plan, these five questions can help you assess if it needs updating.

1. Have your assets or the value of your estate changed?

A good place to start is taking stock of what your estate consists of.

Your estate refers to all your assets. It could include cash savings, investment, property, and other items. Since you made an estate plan, you may have acquired new assets or disposed of others.

As well as taking stock of your assets, you should review the estate’s value – you may be surprised by how it’s changed.

According to the Land Registry, between May 2017 and May 2022, the value of the average property in the UK increased by more than £60,000. In contrast, you may have depleted other assets to fund your lifestyle.

This step is important for several reasons. Understanding your estate is necessary for effectively distributing it, and if your estate has changed, you may want to update your wishes.

The value of your estate will also affect your Inheritance Tax (IHT) liability.

2. Do you need to consider Inheritance Tax?

If the total value of your estate exceeds certain thresholds, your estate could be liable for IHT. With a standard rate of 40%, it can significantly reduce what you leave behind for loved ones.

For the 2022/23 tax year, you can pass on up to £325,000 without IHT being due. This is known as the “nil-rate band”.

If you leave some types of property, including your main home, to children or grandchildren, you can also take advantage of the residence nil-rate band. This is £175,000 for the 2022/23 tax year.

So, you can often leave up to £500,000 without needing to consider IHT.

If you’re married or in a civil partnership, you can pass on unused allowances. So, as a couple, you may be able to pass on up to £1 million without a IHT liability.

If the value of your estate exceeds these thresholds, there are often steps you can take to reduce an IHT bill, but you need to be proactive. If you think your estate could be liable for IHT, please contact us.

3. Does your will still reflect your wishes?

A will is the only way to ensure that your wishes are carried out when you pass away. As a result, a regular review of your will is vital.

If you decide your will needs updating, you have two options.

The first is to write a new will. This should clearly state that it revokes all previous wills and you should destroy all copies of your old will.

The second is through a codicil, which makes an official alteration to an existing will. A codicil can be useful if you want to make minor changes to your will, such as changing the executor or adding a grandchild as a beneficiary.

4. Do you have a plan for your later years?

While estate planning often focuses on what you’ll leave behind for loved ones, ensuring your long-term security is just as important.

If you don’t already have a Lasting Power of Attorney (LPA) in place, it’s a step you should consider.

An LPA gives someone you trust the ability to make decisions on your behalf if you can’t. An LPA can either cover health or financial decisions. While losing mental capacity isn’t something anyone wants to think about, naming an LPA can ensure a loved one can provide support if it does happen.

You should also consider potential care costs. If you needed care later in life, do you have a fund to pay for it? And how would care costs affect other parts of your estate plan?

Setting out a plan now means you can think about what your wishes would be, and set aside provisions accordingly.

5. Have allowances or reliefs changed since you made your estate plan?

The government may make changes to allowances and even introduce or remove reliefs.

Ensuring your estate plan reflects the current rules means you can pass on as much wealth as possible to your loved ones. If you overlook this step, you could miss out on opportunities.

It can be difficult to keep up to date with tax changes and understand which ones make sense for you. Working with an estate planner means you can have confidence in the steps you take and know that your plan will accurately reflect the current rules.

Please contact us to review your estate plan

If you’d like an expert to review your estate plan, please contact us. We’ll work with you to craft a plan that matches your needs, goals, and estate.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate estate planning, tax planning, or will writing.

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