How To Plan Out What To Leave With Your Inheritance

Photo by Andrea Piacquadio

If you are wealthy, inheritance can be life-changing for your next of kin. That is why you must have everything arranged so your family gets all your inheritance. It is an opportunity to change their life so make sure you do it right.

There are many benefits to inheritance as it can help pay off a mortgage, buy a new house, finish off education, or invest for their retirement. 

The options are endless with inheritance. However, people will believe that inheritance will last forever. 

However, your next of kin is unable to do that unless you have already sorted your inheritance. Let's look at how you can set up your will for your family.

Create A List Of Who You Want To Receive Your Inheritance

Creating a list for your will is very important. You also need to pick an executor and this needs to be a family member or friend. Make sure you make them aware that they are the executor as well, once you have picked your executor. You need to work out who will be included in your will and these are known as beneficiaries.

It shouldn’t take you too long and should be those who you are close to. Firstly, your partner should be included in the will and after that, it needs to be your children, brothers and sisters. 

If you want to leave some to your friends or a charity then you can but in most cases, it will be close family members.

Take Note Of All Your Assets

The next step is to make a note of all your assets and this will take much longer. Start easy by working out your savings, investment money, and valuable objects that you may have. 

It could be heirlooms or jewelry pieces. Once you have done that, you need to work out the more technical part of your will.

The next step is to work out your pension and who you wish to give this to. Something else you will need to consider is your business, that's if you own one. You also need to consider your investments if you have any. 

That includes stocks & shares, bonds, and funds. Property is the final asset on your list. If you only own your home then that is easy however, if you have multiple properties, you need to include those as well.

Think About How You Are Splitting Your Money and Assets

Figuring out who you will leave your will to is the difficult part. It is completely up to you. However, there are five different types of legacy you can leave. There is; a specific bequest, pecuniary bequest, residuary bequest, reversionary bequest, or a trust.

Specific Bequest

A specific bequest is when you are looking to give a specified item to an individual. That could be anything such as a piece of jewellery, a car, a house or any other type of asset. It could also be a family heirloom such as luxury cushion covers, a war medal, an engagement ring, furniture or anything that means something to your family.

Pecuniary Bequest

That is when a fixed sum of money is agreed however inflation can affect the value of this money. Therefore, the longer this amount of money is not given, the lower its value will be when the time comes around. 

It leads to people investing their money so it counters inflation. If you want to give people money, it is better to give them an investment.

Residuary Bequest

A residuary bequest is where you give all of your property or some of the property. It is after all your debt, expenses and your other specific bequests.

Reversionary Bequest

A reversionary bequest is the next person who is in line for the gifts if the person you originally proposed has died before you.

Trust

This grants access to the named trustees to control your assets on behalf of the other trustees. In some cases, you may have to specify which beneficiary goes to which trustee.

Finally, Check If You Have To Pay Inheritance Tax

Inheritance tax only has to be paid when the value of your property is less than £325,000. You also don’t need to pay inheritance tax if they are giving all property above £325,000 to your spouse. 

The other reason, and final reason, is that you don’t have to pay inheritance if you leave all your property above £325,000 to a charity.