Estate Planning Explained: What, Why and How?

Thinking about a future where we’re no longer around can be uncomfortable, and confusing estate planning only adds to the worry. We’ve put together this handy guide with everything you need to know before getting started, to give you peace of mind.

For many of us, thinking ahead into a future where we’re no longer around can be a very uncomfortable experience. However, it is a necessity if you want to ensure the peace of mind of your loved ones when the time comes. In order to minimize any worry, we’ve put together this handy guide with everything you need to know about estate planning before getting started.  

What is estate planning? 

We often picture an ‘estate’ as a big sprawling house in the countryside, but this isn’t what we mean when we talk about planning your estate. In this context your estate is your finances, property and everything you own, no matter how large. Estate planning is essentially the process of organising your money, assets and property during your life so that a clear plan is in place for after your death. This plan will detail, amongst other things, how your estate will be divided and who it will be managed by.  

Why plan your estate? 

A proper estate plan not only puts your loved ones at ease that everything is organised on their behalf and your finances are protected, but it also gives you more control over your assets when you’re not around. For example, after properly considering what is in your estate you can then set out wishes for what you want to happen to it, finding comfort in knowing that your will is upheld and protected from legal challenge. As a result of proper planning, you may also be able to reduce the amount of inheritance tax that your beneficiaries have to pay.  

Who should plan their estate? 

There is a common misconception that only people of retirement age should start thinking about planning their estate and organising their will. This is definitely not the case, as everyone of all ages has an estate of some kind because it covers everything you own. From your car, home or other property, to current and savings accounts, investments, life insurance, furniture and personal possessions. 

Estate planning is also not just for wealthy people. Although people with larger estates may feel more incentive to organise it fully, estate planning may actually benefit people with average estates more. This is because without proper planning, your loved ones’ time and money gets lost after your death and thus the financial impact on those with average incomes is more detrimental.   

Where to begin with planning your estate 

Gather your important information and documents 
  • In order to plan your estate, you need to know what your finances, assets and valuables amount to. Finding any related documents and information before speaking to an advisor can speed up the process and allows you to receive more tailored advice. You can then organise these documents within the Auderli app. 
Write a Will
  • It’s a bit of a no-brainer, but having a will written and in place for the future ensures that everyone has peace of mind. Although it seems daunting at first, it is actually a fairly simple and affordable process, as a will-writer will guide you through the whole task and many even offer incentives such as free wills when you use their services.  
Plan your funeral 
  • This may not be something you consider as part of organising your estate, but planning your funeral and setting aside the funds for it takes the emotional and financial pressure off of your loved ones during a difficult time. It's an invaluable job, and planning for your funeral lets you have control over how and where your life is celebrated.  

Less obvious elements to consider  

Aside from writing a will, there are other less obvious (but equally as important) elements to consider when planning your estate, these include: 

Power of attorney & care 
  • In order to prepare for if you ever become incapacitated, it is great to give power of attorney to people whom you trust and who have your best interest at heart. They can then vouch for you and your estate on your behalf if you’re no longer in the position to do so. For the same reasons, if you become disabled or unwell it is also beneficial to have a care plan in place that you and your family are all on board with. 
Insurance  
  • You should consider arranging disability insurance for if you can no longer work due to disability, care insurance to cover costs of care in longer-term illness/injury and life insurance in the event of your death. These all allow you to help pay and provide for yourself and your loved ones in times which otherwise would present huge financial strain.  
Naming a guardian to look after children and their inheritance  
  • This one is pretty self-explanatory, but making sure plans are in place for minor age children ensures that they will be cared and provided for by people you trust. 
Using your estate plan to minimise any court costs or legal fees 
  • This can be achieved through funding assets into a living trust, completing or updating beneficiary designations, or otherwise aligning your assets with your estate plan. 
Transferring your business 
  • If you own a business, you should plan for the future and potential transfer of that business to a named person either at retirement, disability, incapacity or death.  
Itemise your inventory 
  • A less necessary but still useful step would be to walk around your home making a list of all your owned items. These will add up to much more than you expect, and if somebody comes to mind whom you would like to have a certain item eventually, you can add this to the list too.  

Once your estate is planned, what are the ongoing tasks you need to do to maintain it? 

Estate planning is an ongoing process, and your plan needs to be updated as your family and financial situations change, as well as any changes to the law. To keep on top of your plan you should: 

  • Regularly review and update your important documents, making sure everything is still relevant and any new documents are uploaded to your Auderli portfolio. 
  • Review your will, making sure it’s still accurate to your wishes. Discuss any changes you want to make to your plan with your will-writer so that everything is officially documented.   
  • Keep adding to written lists any unofficial wishes, and let your estate administrator or family members know where it is located.  

Should you seek professional help from an estate planner? 

It is always beneficial to seek professional advice from either a financial advisor, whose role it is to help you grow and accumulate wealth, or an estate planner who will help you to manage your finances and prepare for their eventual distribution. However, this type of advice is not always affordable to everyone, and unless you have a very large estate, you can definitely get by with planning your own providing you use trusted professional will-writing services and insurance providers, as these are practicalities you cannot skip.  

How can Auderli make the process easier? 

With Auderli, you can streamline the process of planning your estate in several ways: 

Net worth Calculator 
  • With our net worth calculator, you can upload all of your finances and assets into one place and get a clear view of your finances to more accurately assess the value of your estate. This makes liaising with advisors and will-writers simpler, as you are more informed about what you own and what you’re worth 
Document Upload 
  • By uploading your important documents to Auderli, everything is stored safely and securely in organised categories. You can easily access and update documents relating to your will, insurance or business, meaning you’ll no longer have to search high and low for pieces of paper when planning your estate.  
Portfolio sharing 
  • Once your details are uploaded to the app, sharing your portfolio with advisors and family members is a breeze, and means that all the relevant people can be informed about your finances for the future without compromising your security. Auderli’s read-only feature means that your portfolio remains completely in your control.  

The biggest benefit is peace of mind 

With this information, hopefully you now feel confident enough to begin planning your estate. Organising your finances on behalf of your loved ones provides peace of mind all round, and is arguably the most considerate thing you can do for your family. With Auderli, you can keep everything stored and organised digitally for easy access, helping you to initiate those important conversations around planning for when you're not around and the distribution of your estate.