The importance of Estate Planning

Granted it’s a sensitive topic to discuss, but legacy planning is vitally important for both your own peace-of-mind and to guarantee that those you leave behind will be treated in the manner you had wished for. Putting it off won’t cause you the grief in the long run, but will pass it on to those left behind, and no one wants added grief during a time when you are already grieving.

As West Sussex estate planners, we often give clients these top tips to ensure that their assets are protected in the event of your incapacitation or death:

1. Consider your assets

Cast aside all emotion for a moment and take a look at the raw figures. What exactly do your assets total? Look at what you own holistically, not forgetting to include the following:

  • Property
  • Personal valuables (vehicles, jewelry, etc.)
  • Bank accounts
  • Investment accounts
  • Retirement plans (SIPP, SSAS, Personal Pension, Defined Benefit etc.)
  • Business interests (ownership, equipment, etc.)
  • Benefits payable upon death (life insurance, Social Security, etc.)

Naturally there will be expenses too though, so from this figure, subtract any liabilities from sources such as:

  • Credit card debt
  • Mortgage repayments
  • Vehicle loans
  • Personal loans

This is a really simple way to gain an overview of what exactly your estate is worth. On an emotional level, it will also highlight any particular valuables of heirlooms you would like to pass down, and to whom. From here, you can start thinking about where you would like to direct the rest of your net worth, and whether there are any debts you might like to start paying down.

2. Get the paperwork in order

We can’t stress enough the importance of putting down your wishes in writing. This gives you the greatest chances of having your wishes carried out after your death, but also while you are living, if you were to become physically or mentally incapacitated. Ensure that you have the following documents, and be sure to review them regularly, or if your personal circumstances change:

Last Will and Testament, detailing how you wish your assets distributed upon your death

Power of Attorney, authorizing a person, or persons, to act on your behalf if you’re incapacitated.

Health Care Directive, detailing the level and type of care you would wish to receive, should you become incapacitated.

Living Will, authorizing a person, or persons, to make medical decisions for you, if you are unable to make them yourself, based upon what is stipulated in your health care directive.

3. Discuss your wishes with your spouse

It’s a difficult conversation to have but informing your spouse about your wishes is actually a privilege that many don’t get to have. As awkward as the conversation might be, you are really doing your loved ones a favour by discussing things ahead of time so that, if you are to die first, they don’t have to worry about what you would have wanted on top of their own grief.  Be sure to discuss the following:

  • Are all of the important documents in a safe place, that we are both aware of? (personal ID, bank accounts, legacy documents, etc.)
  • Who should execute our will?
  • Who should our key beneficiaries be? What do we want to leave them?
  • Are there any charities we would we like to support with our legacy?
  • In the event of incapacitation, what are our medical wishes
  • Where will the surviving spouse live after one of us dies? 

4. Speak to the experts

If you don’t have all the relevant paperwork in order when you die, your estate will be settled by the state – a process that can be messy and stressful for those left behind. To make what is sure to be a difficult period easier on your loved ones, it really is advisable to speak to an estate planner about ensuring your assets are correctly managed upon your death.

This article does not constitute financial advice and should not be construed as such.