Protecting your home with home insurance and your car with vehicle insurance is pretty standard practice. So it’s baffling to me that protecting your family’s future, your estate and your business, should something happen to you, is often completely overlooked.
The risks associated with not putting plans in place are huge and it concerns me that people often base their decisions on a number of incorrect assumptions:
“Everything will go to my partner when I die.”
Many people believe their spouse will automatically inherit everything, but it depends on the size and type of estate and other living family members.
Your spouse will only get a fixed amount and the rest will be split equally between your spouse and children who get their share at 18 years of age.
It is worth noting that a partner who you live with, or co-habitee, is not provided for at all if there is no will, regardless of how long you have lived together.
“My business will carry on as normal if anything happens to me.”
Failing to plan for who will operate your business if you are unable to do so or who will inherit your share if you die, can have a significant impact on the success and worth of the business.
It is really important to consider how your interest in the business will pass on your death, putting in place arrangements such as cross option agreements, appropriate life insurance and a well-drafted will.
This can go a long way to ensuring the business survives you, creates cash value for your family and, done correctly, saves inheritance tax.
“Inheritance tax won’t affect me.”
Many people believe their estate won’t reach the threshold to expose them to inheritance tax, but significant sums such as death in service benefit, life insurance and pension lump sum payments often push estates over the inheritance tax threshold, leading to 40% tax being paid on anything above this limit.
Setting up a trust for these lump sum payments can be a way to provide for your loved ones, children or grandchildren while minimising the amount of inheritance tax your estate will be liable for.