Estate Planning: A Plain English Guide

Estate planning simply means deciding, while you are able to, what should happen to your money, property and belongings when you die, and who should look after your affairs if you ever cannot do so yourself. Your “estate” is everything you own: your home, savings, investments, pensions, life insurance, vehicles and personal possessions, less anything you owe.

It is not just for the wealthy. Anyone who owns a home, has children, lives with a partner or has views about who should make decisions for them later in life will benefit from a little planning. A good plan does three things:

• Protects the people you care about, so they inherit what you intended, with as little delay, cost and worry as possible.
• Keeps you in control, by choosing the people you trust to act for you if illness or an accident means you cannot.
• Uses the tax allowances available, so that more of what you have built up goes to your family rather than to inheritance tax.

The building blocks are usually a will, lasting powers of attorney, an understanding of inheritance tax, and, where they help, lifetime gifts, trusts and up to date pension and insurance nominations. We look at each below.

A will is the foundation of any estate plan. Without one, the intestacy rules decide who inherits, and the result is often not what people expect. In particular, an unmarried partner has no automatic right to inherit anything under the intestacy rules, however long you have lived together. Stepchildren are not included either, unless they were legally adopted.

A will lets you:

• choose who inherits, and in what shares;
• appoint executors you trust to deal with your estate;
• name guardians for children under 18;
• leave specific gifts, such as jewellery, a family heirloom or a gift to charity;
• set up trusts, for example to protect a young or vulnerable beneficiary;
• make the most of inheritance tax allowances.

It is worth knowing that in England and Wales getting married or entering a civil partnership usually cancels an existing will, and divorce changes how an existing will works. Both are good reasons to review yours.

Our fixed fees for will writing start from £195 + VAT for a single will and £295 + VAT for mirror wills for straightforward estates. If your affairs are more involved, we will tell you the cost before we start.

Estate planning is not only about what happens after you die. If you lose the ability to make decisions because of illness, dementia or an accident, nobody, not even your husband, wife or children, has an automatic right to manage your bank accounts or make decisions about your care.

A lasting power of attorney (LPA) lets you choose the people you trust to step in. There are two types:

• Property and financial affairs, covering things like paying bills, managing bank accounts and, if needed, selling your home.
• Health and welfare, covering decisions about your daily care, medical treatment and where you live. This one can only be used once you can no longer make the decision yourself.

An LPA must be registered with the Office of the Public Guardian before it can be used. Without one, your family may have to apply to the Court of Protection to be appointed as your deputy, which is slower, more expensive and gives you no say in who is chosen. You can read more on our power of attorney page.

Inheritance tax is charged on estates above certain thresholds. The headline rules in England and Wales are:

• Nil rate band: the first £325,000 of an estate is taxed at 0%.
• Residence nil rate band: up to a further £175,000 is available where your home, or your share of it, passes to your children or grandchildren (including step, adopted and foster children). It is gradually reduced for estates worth more than £2 million.
• The rate: anything above the available allowances is usually taxed at 40%. This can fall to 36% if at least 10% of the net estate is left to charity.

Both allowances are frozen at these levels for the next few years, so more estates are coming within reach of inheritance tax as property values rise.

Gifts to a husband, wife or civil partner are generally free of inheritance tax, and any allowance the first spouse does not use can be transferred to the survivor. That means a married couple or civil partners leaving their home to their children may be able to pass on up to £1 million between them without inheritance tax. The same exemption does not apply to unmarried partners, which is one of the most important differences in the whole system.

Other reliefs exist, including for gifts to charity and for certain business and agricultural property, and the rules on these have been changing. Our inheritance tax planning page explains how we help, and we work alongside your accountant or financial adviser where specialist tax advice is needed.

Giving money or property away during your lifetime can reduce the value of your estate, and many people enjoy seeing their family benefit now rather than later. Some gifts are exempt from inheritance tax straight away, including:

• up to £3,000 a year in total (the annual exemption), and you can carry forward one unused year;
• small gifts of up to £250 per person per year, to people who have not received part of your annual exemption;
• wedding or civil partnership gifts, within set limits depending on your relationship to the couple;
• regular gifts made out of your surplus income that do not reduce your standard of living, provided you keep good records.

Most other gifts to individuals are “potentially exempt”. If you live for seven years after making the gift, it falls outside your estate for inheritance tax. If you die within seven years, it may be taxed, although where tax is due on a gift made between three and seven years before death, taper relief reduces the amount payable on a sliding scale.

A word of caution: if you give something away but keep using or benefiting from it, such as giving your home to your children and carrying on living there rent free, it is usually still treated as yours for inheritance tax. Gifts also need to be affordable, so you do not leave yourself short later in life. Talking it through first is always worthwhile.

A trust is an arrangement where trustees hold money or property for the benefit of others. Trusts can be created in your will or during your lifetime, and they are useful when you want to give but keep some control. For example, a trust can:

• look after an inheritance for children or grandchildren until they are old enough to manage it;
• protect a beneficiary who is vulnerable, has a disability or might be at risk of losing an inheritance;
• give a surviving partner the right to live in the home for life, while making sure it eventually passes to your children, which is often helpful in second marriages and blended families;
• allow trustees flexibility to decide who benefits and when.

Trusts have their own tax rules, and many now need to be registered with HMRC’s Trust Registration Service, so they need careful setting up. Our trusts page explains more.

Some of your most valuable assets may not be covered by your will at all. Pension death benefits are usually paid at the discretion of the pension scheme, guided by the expression of wishes or nomination form you have completed. Many people have not updated theirs in years, and some still name an ex partner.

Life insurance can also catch families out. A policy that pays into your estate adds to its value for inheritance tax and can only be paid out once probate is granted. A policy written in trust can often be paid directly to your chosen beneficiaries, more quickly and potentially outside your estate.

The government has confirmed plans for most unused pension funds and death benefits to be brought within the inheritance tax net from April 2027, so it is a good time to review how your pensions fit into your wider plan. A quick check of your nominations and policies is one of the easiest and most valuable steps you can take.

An estate plan is not a one off job. We suggest looking at yours every few years, and always after a major life change, such as:

• getting married, entering a civil partnership or moving in with a partner;
• separating or divorcing;
• the birth or adoption of a child or grandchild;
• buying or selling a home, or a large change in your savings or investments;
• starting, selling or retiring from a business or farm;
• the death or illness of an executor, attorney, guardian or beneficiary;
• changes in the law or tax rules.

Reviews are usually quick, and many people find they need only small changes. You can read more in our article on life events that mean it is time to update your will.

Not at all. Some of the most important parts of estate planning cost very little and matter to everyone: a will that says who inherits and who looks after your children, lasting powers of attorney so the right people can help you, and up to date pension nominations.

Inheritance tax planning becomes more relevant as your estate grows, particularly with rising house prices and allowances that have been frozen for many years. But even if no tax is likely to be due, a clear plan saves your family time, cost and uncertainty at a difficult moment.

You are not legally required to use a solicitor, but mistakes in a will or LPA can be costly and often only come to light when it is too late to fix them. A solicitor can make sure your documents are valid, fit together and do what you intend.

Our Wills & Probate team, led by Partner Andrew Horwich with Associate Solicitor Thomas Jordan, helps families across Scunthorpe, Goole and the surrounding area every week. We explain things in plain English, give you a clear idea of costs before we start, and work alongside your financial adviser or accountant where that helps. Call us to arrange an appointment at our Scunthorpe or Goole office, by phone or by video.