Estate planning and your will: 5 important factors you might have overlooked

Mature couple talking to financial planner at home

When the singer John Lennon died, he left behind an estate worth around £200 million. He had written a will but failed to mention his son from his first marriage, Julian, resulting in a 16-year legal battle.

Sadly, there’s no shortage of headline stories about celebrity wills being disputed, often due to outdated or ambiguous documents – you previously read how Aretha Franklin caused much confusion by seemingly leaving behind two wills.

While it may come as no surprise that multi-million-pound legacies can lead to disputes between potential beneficiaries, the Guardian has reported that as many as 10,000 people in the UK dispute wills every year.

So, if you’ve written a will you’ve taken an important first step towards effective estate planning. However, it’s crucial to ensure that you include all the information necessary to ensure your intentions are clear. A comprehensive, professionally written will could also reduce stress and potential costs for your loved ones.

Read on to discover five important factors you might have overlooked.

1. Planning how to pass on your digital assets

In today’s world, many of us are increasingly reliant on digital assets. These include anything you own that is stored in digital form, such as photos, music, videos, important documents, and so on.

And yet, while 95% of UK adults have digital assets, according to research by Canada Life, only 12% of those who have written a will included digital assets.

While you might think that assets such as photographs and family videos – such as those stored in social media accounts – have no significant “value”, they could be priceless to your loved ones.

What’s more, anything that contains personal information has potential value to others. Indeed, according to the Guardian, identity theft increased by 50% during the first six months of 2023.

So, by including digital assets in your will you could not only ensure that your loved ones have access to them by providing relevant instructions and passwords, but you could also protect your legacy.

2. Choosing a guardian for your children

You might think of your will as a means of passing on your wealth, but this may not be its only purpose.

While it’s not pleasant, it’s important to plan for the worst-case scenario. So, if you have children, appointing guardians in your will could ensure they’re cared for if they are orphaned before they reach 18.

Yet, research by Will Aid shows that more than half of UK adults haven’t named a guardian for their children in their will.

If you haven’t taken this important step at the time of your death, the courts will decide who should care for your children and this may not be in line with your wishes.

In contrast, by appointing guardians in your will, you can ensure that your children are looked after by people you trust, giving you valuable peace of mind.

3. Deciding who will inherit items of sentimental value

You might be inclined to focus on assets of monetary value when writing your will, but naming who you’d like to receive sentimental items may be just as important to your loved ones.

By including items such as beloved artwork, family jewellery, and photographs, you could reduce the risk of family disputes at this difficult time.

Additionally, you can choose how your memory lives on, for example, by ensuring that precious items remain in the family to be passed on to future generations.

4. Setting out your funeral wishes

Including your funeral plans in your will gives you control over how your life will be celebrated. It could also prevent your loved ones from having to face the stress of decision-making and the expense of organisation.

You can use your will to provide detailed instructions for your funeral, set money aside to pay for the arrangements, and even choose your preferred music.

Indeed, there’s more freedom to plan a funeral that reflects your character and the life you’ve lived than ever before. According to Yahoo News, a growing number of people in the UK are opting for individual and eccentric funerals – one funeral director was asked to dress as Gandalf, and a greengrocer requested vegetables instead of flowers at his service.

Setting out your funeral wishes in your will could allow you to create an event that reflects your personality and is a meaningful occasion for those you leave behind.

5. Providing details of charitable donations

If there is a charity that has significance for you, providing details of a donation in your will could allow you to make a positive difference after you’re gone.

It may also help to reduce a potential Inheritance Tax (IHT) bill as charitable donations are not usually considered part of your estate for IHT purposes.

HMRC will either deduct the value of your donation before calculating IHT, or, if you leave at least 10% of your estate to a registered charity, the standard IHT rate of 40% will be reduced to 36%.

If you’re uncertain about how to navigate these complicated tax rules, a financial planner can help. They can work with you to create an estate plan that ensures your wishes are fulfilled after you’re gone and that your wealth is passed on as tax-efficiently as possible.

Get in touch

To find out more about how we can help you create a comprehensive estate plan that ensures your wishes are fulfilled after you’re gone, please get in touch. Email or call us on 01454 416653.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, tax planning, Lasting Powers of Attorney, or will writing.

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