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How to add an Estate Plan - UK

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Louise MacLean
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Is an Estate Plan always needed?

No. The software's default logic for distributing estates will often reflect the client's situation, in which case an Estate Plan is unnecessary. 

Defaults:

  • Single client, no other people in plan: 100% left to 'Person Outside of Plan'.
  • Single client, children in plan: 100% left to children, in equal shares.
  • Couples, no other people in plan: 100% left to spouse/partner on first death, 100% left to person outside of plan on second death (e.g. mirror will).
  • Couples, children in plan: 100% left to spouse/partner on first death, 100% left to children, in equal shares on second death (e.g. mirror will).

An Estate Plan is only required if the defaults do not reflect the client's wishes. For example, the client has a will which bequests part of their estate to their children on first death. 

Tip: Person Outside of Plan means someone who is not listed as a person in the People section of the Dashboard e.g. the bequest will go to a beneficiary who is not a named person in the plan.

How to add an Estate Plan

  1. In the Dashboard, click the + button, then click Estate Plans:

  2. Complete the Basics screen; select the owner of the estate plan, and enter a Name for the plan:

  3. Select whether or not assets should be liquidated if there is an IHT bill to be paid on the bequest of a specific asset (see Asset Distribution in step 6 below):

    If set to No, the specified asset will be shown as transferred in the Legacy screen:



    If set to Yes, the specified asset will be shown as liquidated in the Legacy screen:
     

  4. In the Distributions section, set the order of distributions. 

    Tip: if bequests are made to other people/charity and the remainder of the estate is left to the spouse/partner, the spouse/partner would be last in the list. 

    For example, the will contains a £500,000 bequest split equally between the client's two children, with the balance going to the spouse. The Distribution order should be set as: Other > Charity > Spouse:

  5. Input the details of each category of bequest by clicking on each line in turn in the Distributions section.

    Select the relevant option in the Type dropdown - either Percentage or Fixed Amount for bequests to Charity and/or Spouse; either Percentage, Fixed Amount or Percentage of Threshold for bequests to Other (which includes Non-Legal Partners). 

    Tip: Percentage of Threshold enables you to model a proportion of the Nil Rate Band being left to a beneficiary other than the spouse/charity.

    In the Other section there are additional fields in the Distribution Breakdown section in which to input the proportion to go to each beneficiary. 

    Tip: if you don't want to include the beneficiaries of the will as people in the Voyant plan, you would put 100% in the Person Outside of Plan field in the Distribution Breakdown. Person Outside of Plan can also be used to model bequests into Trust.

    In this example, £500,000 is being left to the children in equal shares, so the Type has been set to Fixed Amount and £500,000 input in Amount. 50% has been input against each child's name.

  6. Optional step: if there are bequests of specific items in the plan to specific beneficiaries this can be modelled in the Asset Distribution screen. This article explains more: How to distribute specified assets to specified beneficiaries.

  7. Once the Estate Plan is set up as required, click Done.

  8. Repeat the steps above to set up an Estate Plan for the Spouse/Partner, if required.

    Tip: only one Estate Plan can be input for each person in each plan.

How to check the Estate Plan is working as expected

Click Overview > Legacy to view the impact of the Estate Plan:

If you have two plans, one with the software defaults and one with the Estate Plans, you can compare the outcome using Overview > Legacy > Comparison View:

Tip: if the outcome in the Legacy Overview does not reflect the Estate Plan check the Detailed view as it may be that there are insufficient liquid assets in the estate to fulfil the bequest.

Are pensions included in Estate Plans?

Not usually, as Estate Plans are used to control the distribution of assets covered by the client's will. This does not include pensions as, generally, pensions are not included in a will. They are usually held in trust and pension providers and trustees have discretion over who receives the money, guided by the client's 'expression of wish'. 

By default, the a pension will pass to the spouse/partner on first death in the software. If the client's expression of wish is not reflected by the default logic, the preferred beneficiaries can be modelled in the plan by completing the Beneficiaries screen on each pension. 

Tip: if a pension is set to go to Estate of Insured in the Beneficiaries screen, the pension will be included as part of the estate in the Legacy calculations and distributed according to the Estate Plan. This option is available for drawdown pensions.

Does the software reflect the lower IHT rate if 10% of the net estate is left to charity?

Yes. If an Estate Plan has been set up to leave part of the estate to charity and/or part of the pensions have been left to charity in the Beneficiaries screens for the pensions, and the total distributed to charity exceeds 10% of the net estate, the IHT rate applied will be 36%.

This article explains in more detail: How to leave part of all of an estate to charity

 

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