Consequences Of Failing To Estate Plan
When I ask people whether they have a Will I often get the same responses, “I don’t have anything to give”, “I don’t have any children”, “I’ll do it when I’m older”, “I won’t be around to deal with it”. I can’t stress enough that anyone over the age of eighteen should start to think about estate planning, i.e. writing their Will to ensure that they have plans in place and know what will happen to their estate when the inevitable happens. What people don’t take into account are the consequences of failing to estate plan and I hope that the following list will encourage you to take the next step and put plans in place.
- Inheritance Tax – If you are married with children, people usually assume that their estate will automatically pass to their spouse upon their death. What they don’t realise is that only the first £250,000 of their estate will pass to their spouse and the remaining amount above this limit will be split 50/50 between their surviving spouse and children. Anything that passes to your spouse is exempt from inheritance tax. However, whatever passes to your children could potentially mean that your loved ones may receive an inheritance tax bill.
- Family Disputes – Failing to estate plan can lead to confusion after your death with regards to what your wishes were. This can often lead to arguments or long running family disputes. Arguments can arise over menial issues, such as who should inherit a certain personal item. They can also arise over emotional decisions that need to be made after your death, such as whether you wanted to be buried or cremated, have your ashes scattered or interred. You can avoid these issues by clearly stipulating within a Will who is to inherit what and what you would like your funeral plans to be.
- Care Home Fees – If you pass away without being married or having any children and there is no Will in place, your estate will automatically pass to your surviving parents. You might think that you are more than happy for this to happen. However, people often don’t take into consideration that if their parents are of a certain age or may require residential or non-residential care services then anything they inherit will be taken into consideration in any financial assessment to determine any contribution payable towards their care. As a result, your estate could be swallowed up by care home fees.
- Exclusion of Loved Ones and Potential Claims Against the Estate – Without a Will stipulating who you would like to inherit from your estate, your estate will follow the intestacy rules. These rules dictate who will inherit from your estate. This often means that people you hoped would inherit from your estate are left out. There are no laws currently in place to allow estates to pass to unmarried partners. Co-habitants are largely left unprotected. Therefore, this increases the risk that people who feel they have a right to inherit (partners of many years) could bring a claim against the estate. Aside from being distressing and emotionally draining, legal proceedings can be costly, lengthy and can ultimately eat into any estate you leave behind.
Thinking about your death is never enjoyable. However, the fact remains that estate planning is more for your loved ones then it is about you. You are ensuring that the time after your passing is as stress free as possible for those that are left behind.
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