Estate Planning and Life Planning – How do they work in tandem?

As you know I am a big fan of encouraging you to live your best life right now. Whilst you need to ensure you remain comfortable, I don’t want you to spend your whole life focusing on your retirement.

So, when it comes to estate planning, how does that balance with living your best life now?

How do estate planning and life planning work in tandem?

I believe the first thing is to determine how much money you require to live the life you want. Whilst you do that at length when you first put together your LifePlan, reviewing that on an annual basis will ensure the figures stay current.

When you start reviewing your finances, it’s important to ensure you are making the most of all of your allowances. Often, when I talk to new clients, they have focused on channelling all of their available money into their pension. But you have an annual ISA allowance, plus a dividend and other investment allowances too. If you focus solely on your pension, you can only take a certain amount of your pension before you need to pay tax. If you make the most of all of your allowances, you can reduce your tax liability, whilst maximising the amount of money available to you once you retire or are able to draw your pension.

Why is that important?

Because you need to factor this in when planning your finances. And continue to review it based on changes in your circumstances, plus any changes in what you might want out of your life.

As I have said before, as we get older, we often find we don’t need such a large sum of money to live comfortably, as we did when we were younger.

If you have enough money for the lifestyle, you want right now, then that’s great news. If not, then you need to decide how you are going to achieve that. That’s a matter of personal preference – you might decide to release equity from your property, downgrade to a smaller home, sell assets, or just work longer.

Of course, releasing equity or selling assets is going to have an effect on your estate. So, this is where balancing your quality of life and looking after your loved ones starts to kick in. Do you want to leave a substantial inheritance? Or would you prefer to help your family, but still know you have enjoyed life while you can? It is certainly possible to do both.

And what about if you become ill and need to go into long term care?

What kind of care home will you want to live in? How will that be funded?

One of the ways to protect your estate and ensure you have a good quality of life is to take out life assurance that can be set up to pay into a Trust. If you are married, you can choose to have the sum payable on the second death – so it only pays out when the remaining spouse dies. That money can build up your estate, whilst freeing up money now for you to enjoy.

I believe the best approach is to strike a balance.

Minimise inheritance tax for your beneficiaries, so they can benefit from as much of your estate as possible. But equally, don’t live a frugal existence purely to build up your estate – you only have one life, so enjoy it to the full. Your loved ones would prefer to see you having a great time – you’ve worked hard, so now it’s time to play hard!

Remember that you can change course at any time. Right now, with good health, you may have plans to travel and enjoy active pursuits. As you get older, you may want to slow down. That’s the time to review your LifePlan and perhaps focus more on protecting your estate still further.

There is no right or wrong answer. It’s important that it is, and remains to be, the best solution for you.

When you are ready, I would love to help you build your LifePlan. Give me a call on 01344 875 310.

Start getting a return on your life…

First steps: Take your free Return on Life Index assessment

estate planning and life planning
Start getting a return on your life…

First steps: Take your free Return on Life Index assessment