What is estate planning?

Schroders Personal Wealth logo

Estate planning is preparing a plan of action for transferring your assets to your beneficiaries or next of kin. This can allow you to pass over more of your estate by transferring assets in a tax-efficient manner.

Tax treatment depends on an individual’s circumstances and may be subject to change in the future.

An individual’s estate usually includes assets such as:

  • Property
  • Investments
  • Vehicles
  • Antiques
  • Life insurance or assurance policies
  • Pensions
  • Savings
  • Debt.

What’s in an estate plan?

Your estate plan details your total assets, including your house, possessions and accounts and how you’d like these assets to be managed when you pass away.

Clearly laying out your net worth with an estate plan is an official declaration within a legal document of how you would like to distribute your assets. 

An estate plan can help you with the following:

Gifts and trusts

A key part of creating an estate plan is the transferring of wealth while you’re alive to family or beneficiaries using tax-efficient gifts or placing assets into trusts. 

Donating to charity

Planning charitable donations is another way that estate planning could help you reduce an inheritance tax bill.

If 10% or more of your estate is left to charity, the rate of inheritance tax paid on the balance of the estate will reduce from 40% to 36%.

Final will and testament

A will and testament is an important legal document that outlines your wishes regarding the distribution of your estate and names your executor(s) – these are the people that will take care of distributing your assets after you pass.

They will be responsible for securing assets and using them to pay any inheritance tax owed, or settle any outstanding debt. This appointed executor will then distribute the remaining assets according to the wishes set out in a will.  

What happens if you don’t plan your estate?

If you haven’t written a will before you pass or become incapacitated, you are declared to have deceased ‘intestate.’

This means your estate will be divided and distributed according to the legal requirements of intestacy, taking away any personal decisions you otherwise would have made.

Want to know more about estate planning?

Visit our inheritance tax and estate planning page to find out how expert advice could help you.

Important legal information

Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065. Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278.

Schroders Personal Wealth is a trading name of Scottish Widows Schroder Personal Wealth Limited.