Last updated on October 6th, 2017 at 10:12 am
We are often asked if there are benefits in giving away part of your estate during your lifetime, rather than waiting until you die. This depends on your financial circumstances.
There may be tax advantages, for instance by reducing your estate’s future inheritance tax liability, but there are time limits and rules which can restrict this.
You may feel that the main benefit of this type of action is the pleasure you get from seeing your loved ones benefit from the gifts that they receive while you are still alive.
Seek advice first
Whatever your reasons for wanting to give away part of your estate now, we would highly recommend that you take advice before making such gifts.
You can contact us for a free consultation to assess your requirements, or you can read our pages on inheritance tax planning here.
- What is estate planning?
A person’s ‘estate’ is comprised of everything they own, including property, savings and items, as well as investments and certain insurance policies. Estate planning is the process of making arrangements, while you are alive and cognisant, for the separation and disposal of your estate after your death or if you become incapacitated.
- Why is it important to have an estate plan?
The following are some of the most important reasons for creating an estate plan:
- minimises inheritance tax burden paid by your heirs
- reduces unnecessary legal fees
- specifies who will become guardian to your children in the event that their other parent is deceased, absent or barred from taking that position
- allows you to specify how you wish to be cared for if you become incapacitated for a period before your death
- helps avoid possible family conflicts between your heirs by specifying who gets what assets
- allows you to choose the type of funeral you wish to have
- What are estate planning documents?
The majority of estate planning details are usually laid out in a person’s will. To find out more about how to write a will, go to the section of this website titled Wills, Estates & Trusts.
To specify what type of medical treatment you wish to receive in the event that you become incapacitated, you may wish to draw up a living will. However, living wills are not very flexible and require particular treatments to be outlined for specific conditions when the living will is drawn up.
The best way to plan for your future medical needs is to arrange lasting power of attorney (LPA). These allow you to officially assign someone responsibility to manage your affairs in the event that you lose your mental capacity. To find out more about LPAs, click here.
- When should estate planning begin?
It’s never too early to begin estate planning. It is recommended that you draw up the appropriate documents as soon as possible in order to ensure that you have a say over the medical care you want in the event that you lose metal capacity.
It is also important to make arrangements once you have accumulated assets or responsibilities (such as guardianship of a child) that you may wish to bequeath to others.
- What estate planning documents do I need?
You do not require any special documents to write a will, but the will needs to be signed by witnesses to make it valid. Find out more about writing a will on our Wills, Estates & Trusts page.