Estate Planning

How do I start planning my estate?

Estate planning can feel overwhelming, but breaking it into clear steps makes the process manageable. You do not need to do everything at once. Start with the essentials and build from there.

1. Take stock of your assets and liabilities: List everything you own, including property, savings, investments, pensions, life insurance policies, and valuable possessions. Note any debts, mortgages, or financial obligations. This gives you a clear picture of your estate's total value and helps identify potential inheritance tax exposure. Estates above £325,000 (or £500,000 if you leave your main home to direct descendants) may face a 40% inheritance tax charge on the excess.
2. Write or update your will: A valid will is the foundation of any estate plan. It ensures your assets go to the people you choose, names an executor to manage your affairs, and can appoint guardians for children under 18. Without a will, intestacy rules decide who inherits, and unmarried partners receive nothing regardless of how long you have been together.
3. Set up lasting power of attorney: A lasting power of attorney lets someone you trust manage your financial or health decisions if you lose mental capacity. There are two types: property and financial affairs, and health and welfare. Each costs £82 to register with the Office of the Public Guardian.
4. Review your pension and life insurance nominations: Pensions and life insurance policies written in trust pass outside your estate and are not subject to inheritance tax or probate. Check that your nomination forms are up to date, particularly after marriage, divorce, or the birth of a child.
5. Consider whether you need trusts: Trusts allow you to control how and when beneficiaries receive assets. They can protect inheritance for children from previous relationships, shield assets from care home fees, or reduce inheritance tax through lifetime gifting strategies.

What kind of estate planning do I need?

Your estate planning needs depend on your personal circumstances, the size of your estate, and who you want to protect. Here are the most common situations and the type of planning that suits each one.

You are a single person with a straightforward estate

If you have a modest estate, no dependants, and clear wishes about who should inherit, a simple will and a property and financial affairs LPA are usually sufficient. This covers the basics: naming beneficiaries, appointing an executor, and ensuring someone can manage your finances if you lose capacity. Total cost: typically £200 to £400.

You are a couple with children

Couples with children should consider mirror wills that include guardian appointments and trust provisions for minors. A trust within your will can protect your children's inheritance until they reach a suitable age, typically 18 or 25. Both partners should also set up LPAs. If your combined estate exceeds the inheritance tax threshold, basic tax planning at this stage can save your family tens of thousands of pounds.

You own a business or have complex assets

Business owners, landlords, and people with overseas property need specialist advice. Business property relief can reduce inheritance tax on qualifying business assets, but the rules are specific and the relief must be structured correctly. A solicitor specialising in private client work, combined with a financial advisor, can ensure your business succession and personal estate planning work together.

You are concerned about care home fees

If you or your parents are approaching later life, planning for potential care costs is essential. Local authorities can assess your assets when determining care fee contributions, and your home may be included in the calculation. Certain trust arrangements can offer some protection, but they must be set up well in advance and for genuine reasons. Transferring assets to avoid care fees after a care need has arisen can be treated as a deliberate deprivation of assets.

You want to minimise inheritance tax

If your estate is likely to exceed the £325,000 nil-rate band (or £500,000 with the residence nil-rate band), proactive tax planning can significantly reduce your family's tax bill. Options include lifetime gifting using the £3,000 annual exemption, setting up trusts, taking out life insurance written in trust to cover the expected tax liability, and making use of business property relief or agricultural property relief where applicable.

What are the different types of estate planning?

Estate planning covers several distinct areas, each addressing a different aspect of protecting your assets and your family. The table below summarises the main components.

How much does estate planning cost in the UK?

Estate planning costs depend on what you need and who provides it. Here is a breakdown of typical fees across the main estate planning services.

You can reduce costs by using online will writing services for straightforward situations and only instructing solicitors for complex matters. Many providers offer package deals combining wills and LPAs at a discount. Free will schemes run by charities such as Will Aid (October) and Free Wills Month (March and November) offer solicitor-drafted simple wills at no cost in exchange for a suggested donation.

What is the most common inheritance mistake?

The most common estate planning mistakes cost families thousands of pounds and years of stress. Understanding what goes wrong helps you avoid the same traps.

• Not making a will at all: This is by far the most common mistake. Without a will, your estate is distributed under intestacy rules regardless of your actual wishes. Unmarried partners, stepchildren, and close friends inherit nothing. Around 54% of UK adults have no will in place.
• Forgetting to update your will after major life events: Marriage automatically revokes an existing will in England and Wales. Divorce does not revoke a will entirely but does remove your ex-spouse as a beneficiary. Many people forget to update their will after having children, buying property, or receiving an inheritance.
• Not setting up lasting power of attorney: If you lose mental capacity without an LPA in place, your family must apply to the Court of Protection for a deputyship order. This process typically takes 4 to 6 months and costs significantly more than registering an LPA in advance (£371 application fee for deputyship versus £82 for LPA registration).
• Ignoring inheritance tax until it is too late: Many tax-saving strategies, such as lifetime gifts using the seven-year rule, require advance planning. Gifts made within seven years of death are still counted as part of your estate for tax purposes. Starting tax planning early, particularly when your estate first approaches the £325,000 threshold, gives you the most options.
• Assuming joint ownership covers everything: While jointly owned property usually passes automatically to the surviving owner, this does not replace a will for other assets. It also does not account for what happens after both owners have died, and it offers no protection if one owner needs long-term care.
• Choosing the wrong executor: Your executor is responsible for administering your entire estate, which can take 12 to 18 months for complex estates. Choosing someone too elderly, too busy, or too emotionally close to the situation can cause delays and conflict. Consider appointing a professional executor alongside a family member.

What are the best ways to protect your estate?

1. Make a will and review it every 3 to 5 years: A current, professionally drafted will is the single most important step. Review it after any major life event and at least every few years to ensure it still reflects your wishes and circumstances. A simple will costs from £90, which is insignificant compared to the cost of intestacy disputes.
2. Set up both types of lasting power of attorney: Register a property and financial affairs LPA and a health and welfare LPA while you are healthy and have full mental capacity. The combined cost of around £300 to £600 plus £164 in registration fees is far less than the £371+ cost and 4 to 6 month delay of a Court of Protection deputyship application.
3. Use your annual gifting allowances consistently: You can give away £3,000 per year free of inheritance tax, plus unlimited small gifts of up to £250 per person. Regular gifts from surplus income are also exempt if they form a pattern and do not reduce your standard of living. Consistent use of these exemptions over 10 to 20 years can remove significant value from your taxable estate.
4. Write life insurance policies in trust: A life insurance policy written in trust pays out directly to your beneficiaries without going through probate or being counted as part of your estate for inheritance tax purposes. This is a simple administrative step that your insurance provider can arrange at no extra cost.
5. Keep your important documents organised and accessible: Store your will, LPA certificates, insurance policies, pension details, and property deeds in a secure but accessible location. Tell your executor and attorney where everything is kept. Consider registering your will with the National Will Register (around £40) so it can be found after your death.

How does the estate planning process work?

Estate planning is not a single event but an ongoing process that evolves as your circumstances change. Here is how a typical estate planning journey works from start to finish.

Initial assessment: You begin by taking stock of your assets, liabilities, and family circumstances. This includes valuing your property, savings, investments, pensions, and life insurance. You also identify who you want to benefit from your estate and who should manage your affairs if you cannot. Many solicitors and financial advisors offer a free initial consultation to assess your situation and recommend the right level of planning.

Creating core documents: Based on your assessment, you create the essential documents. For most people, this means a will and one or two lasting powers of attorney. For those with larger or more complex estates, it may also include setting up trusts, restructuring asset ownership, or arranging life insurance to cover potential inheritance tax liabilities. The drafting process typically takes 2 to 4 weeks for a solicitor or specialist, though online will services can be completed in under an hour.

Tax planning and optimisation: If your estate is likely to exceed the inheritance tax threshold, your advisor will help you develop strategies to reduce the tax burden on your beneficiaries. This might include starting a programme of lifetime gifting, placing assets into trusts, using business property relief, or ensuring you qualify for the residence nil-rate band by leaving your main home to direct descendants.

Registration and storage: Lasting powers of attorney must be registered with the Office of the Public Guardian before they can be used, a process that takes 8 to 10 weeks. Your will should be stored securely, either with your solicitor, at the Probate Service (£25 one-off fee), or in a fireproof safe at home. Update your executor on where all documents are kept.

Regular review: Estate planning is not a one-off task. Review your plan after marriage, divorce, births, deaths, property purchases, and significant changes in asset values. Tax thresholds and legislation change regularly, so a review every 3 to 5 years with a professional ensures your plan remains effective and tax-efficient.