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Estate planning simply means thinking about what you own, who you want to benefit from it, and how to arrange things so that your wishes are carried out efficiently and with the minimum unnecessary cost.
For some people, that means a straightforward will and not much else. For others like those with larger estates, complex family situations, business interests, or assets in more than one country, it means something more involved. Either way, the principle is the same, which is taking control now, while you can, rather than leaving your family to sort things out after you are gone.
Tax is usually the starting point, because inheritance tax is where poor planning costs families the most money. The nil-rate band, which is the amount you can leave without inheritance tax, has been frozen for years while property values have climbed steadily.
Inheritance Tax: Why It Matters More Than Ever
What used to be a tax impacting only the genuinely wealthy now catches middle-class families whose main asset is a house bought decades ago. The residence nil-rate band provides some additional relief when a home passes to direct descendants, but the rules are riddled with conditions and traps.
Married couples and civil partners can transfer unused allowances between them, effectively doubling what can pass tax-free but only if their affairs are structured correctly. Getting advice early can make a significant difference to how much of your estate ends up with HMRC rather than your family.
Lifetime giving is one of the simplest estate planning tools. Gifts made more than seven years before death fall outside your estate entirely. Gifts within seven years may be taxed on a sliding scale depending on when they were made. Annual exemptions allow modest tax-free gifts each year. Regular gifts out of surplus income – if you can genuinely afford them without affecting your standard of living – can be exempt regardless of amount but there are pitfalls. Give away your house while continuing to live in it, and the gift with reservation rules may mean it stays in your estate for tax purposes anyway. The detail matters and the rules are less intuitive than they appear.
Trusts in Estate Planning
Trusts feature in many estate plans, whether to protect assets from sideways disinheritance (your spouse’s future partner inheriting what you intended for your children), to provide for vulnerable beneficiaries, or to give away assets while retaining some control over how they are used. The tax treatment of trusts has become less favourable over the years, but they remain useful tools in the right circumstances. We help clients understand when a trust adds value and when simpler arrangements will do.
Business owners face particular challenges. Business property relief can mean that qualifying business assets pass free of inheritance tax, but the relief is not automatic and the rules on what qualifies are complex.
Succession planning for a family business involves more than just tax. There are questions of control, fairness between children who work in the business and those who do not, buy-out arrangements, shareholder agreements, and sometimes the difficult recognition that the next generation may not want to take over at all.
We work with business owners and their accountants to develop plans that address both the tax position and the human dynamics involved.
Pensions and Estate Planning
Pensions have become increasingly important in estate planning since the rules changed in 2015. Defined contribution pension pots can now pass to beneficiaries free of inheritance tax, often free of income tax too if the holder dies before 75.
For some people, drawing down other assets first and leaving pension funds untouched as long as possible makes excellent sense. For others, the picture is more complicated because pension death benefits interact with the rest of your estate in ways that require careful thought.
Powers of attorney are not strictly estate planning, but they belong in the same conversation. A lasting power of attorney for property and financial affairs lets someone you trust manage your money if you lose capacity to do so yourself.
Without one, your family may need to apply to the Court of Protection, which is an expensive, time-consuming process that leaves your affairs in limbo while the application is processed. A health and welfare Lasting Power of Attorney (LPA) covers decisions about medical treatment and care. These documents cost relatively little to prepare and provide enormous peace of mind. We prepare them routinely alongside wills.
Estate planning is not a one-off exercise. Circumstances change in marriages, divorces, births, deaths, house moves, business sales, and changes in the law. A plan that made sense five years ago may need revisiting. We encourage clients to review their arrangements periodically, and we keep in touch with those for whom we act to prompt a conversation when it seems appropriate.
How We Can Help
At Tower Bridge Legal, our aim is not to sell you complexity for its own sake but to help you put arrangements in place that achieve your objectives efficiently and stand the test of time.
If you have not thought about these matters recently, now is probably a good moment to start.
