Last updated: October 2025.
What is estate planning?
Estate planning is the process of organising your assets, affairs, and instructions so that what you own is passed on according to your wishes, with the minimum amount of tax, cost, and stress for the people you care about.
It is broader than just writing a will. A complete estate plan typically covers:
- A valid, up-to-date will
- Pension and life insurance death-benefit nominations
- Lasting Powers of Attorney (LPAs) for finance and for health & welfare
- Inheritance Tax (IHT) planning, using allowances and exemptions
- Trusts where appropriate (for children, vulnerable beneficiaries, or asset protection)
- Letter of wishes alongside the will
- Digital assets, what happens to email, social media, cloud accounts
The Financial Conduct Authority does not regulate estate planning, tax advice, wills, or most trusts, so it is important to work with specialists who are qualified and regulated by their own professional bodies.
At a glance: who needs estate planning?
| Your situation | Why you need a plan |
|---|---|
| You own a home | Property values often push estates above the IHT threshold; the home does not always pass as you would expect |
| You have children | You choose who becomes their guardian, not the courts |
| You are unmarried but in a long-term relationship | Cohabiting partners do not automatically inherit anything under UK intestacy rules |
| You have pensions or life insurance | Death benefit goes to whoever you have nominated, not your will. Outdated nominations cause real problems |
| You have an estate over £325,000 | IHT may apply at 40% above the threshold |
| You have a blended family | Default rules may produce outcomes you did not intend (children from a first marriage may be excluded) |
| You have a business | Without planning, business assets can face IHT and forced sale to settle bills |
| You have a family member with special needs | A trust can preserve means-tested benefits while still providing for them |
In practice, almost every adult fits at least one of these. Estate planning is not a high-net-worth topic, it is a household topic.
What happens if I die without a will (intestacy)?
If you die without a valid will in England or Wales, your estate is divided according to intestacy rules set out in the Administration of Estates Act 1925 (as amended). The rules are rigid and often produce results people do not expect.
Key examples of how intestacy can go wrong:
- A cohabiting partner of 20 years receives nothing, regardless of what the couple would have wanted
- Step-children inherit nothing unless legally adopted
- A surviving spouse may not inherit the whole estate, there is a statutory legacy threshold (currently £322,000 in England & Wales), after which the rest is divided between spouse and children
- Children inherit at age 18, no later, no condition, no protection from poor choices, divorces, or creditors
Scotland and Northern Ireland have their own, different intestacy rules.
Why is estate planning more than just writing a will?
A will alone is not enough because several of your most valuable assets do not pass through your will at all.
| Asset | How it passes on death |
|---|---|
| Pensions | By death-benefit nomination (overrides your will) |
| Life insurance in trust | According to the trust deed |
| Jointly-owned property (joint tenants) | Automatically to the surviving owner |
| Jointly-held bank accounts | Same, to the surviving owner |
| ISAs | Through the estate via your will, but with limited additional permitted subscription to spouse |
An out-of-date pension death-benefit form, still pointing to an ex-spouse, for instance, can override the careful wording of a fresh will. Estate planning means reviewing all of these together.
What is Inheritance Tax, and when does it apply?
UK Inheritance Tax is charged at 40% on the value of your estate above the nil-rate band, with several reliefs available:
- Nil-rate band: £325,000 per person
- Residence nil-rate band: an additional £175,000 per person where a main residence is passed to direct descendants (subject to tapering above £2m)
- Spouse/civil partner exemption: unlimited transfers between UK-domiciled spouses, with unused nil-rate band transferable on second death
- Charity exemption: gifts to charity are IHT-free, and leaving 10%+ of the estate to charity reduces the IHT rate on the rest from 40% to 36%
- Business and agricultural reliefs: can reduce IHT on qualifying assets by 50% or 100% (subject to changes announced in the 2024 Autumn Budget, taking effect from April 2026)
These figures are frozen until April 2030, so as asset values rise (especially property), more estates are pulled into IHT each year.
From April 2027, unused pension pots will also be included in the IHT net for the first time, a major change that affects most pension savers. See our pensions and IHT 2027 guide.
What is a Lasting Power of Attorney, and why do I need one?
A Lasting Power of Attorney (LPA) is a legal document that lets you appoint one or more people to make decisions on your behalf if you lose mental capacity. There are two types:
- LPA for Property and Financial Affairs, covers bank accounts, bills, property, investments
- LPA for Health and Welfare, covers medical treatment, care decisions, where you live
You can only create an LPA while you have mental capacity. If capacity is lost without one in place, family members have to apply to the Court of Protection for a Deputyship, a slower, costlier, and more restrictive process.
LPAs are registered with the Office of the Public Guardian. They are not just for older people: serious illness, accident, or stroke can affect anyone at any age.
When should I review my estate plan?
Review at least every 3–5 years, and after any of these life events:
- Marriage or divorce (marriage automatically revokes any earlier will in England & Wales)
- Birth or adoption of children or grandchildren
- Death of a spouse, partner, or named beneficiary
- Significant change in assets (business sale, inheritance, property purchase)
- Moving abroad or your beneficiaries moving abroad
- Major changes in legislation, for example, the April 2027 pension IHT change is a clear trigger to review
Frequently asked questions
Do I really need a will if I am young and healthy?
Yes if you have children, a partner you are not married to, or any assets. The intestacy rules do not accommodate modern family structures, and the cost of fixing the problem after death is far greater than the cost of preparing a will now.
Will a £15 online will from a high-street site do?
For very simple situations, sometimes, but check it has been properly executed (correct witnesses), and review it after any life change. For anything involving children, blended families, business assets, or estates over the IHT threshold, take specialist advice.
Is estate planning expensive?
A basic estate plan (will, LPAs, pension nominations) is usually a few hundred to a few thousand pounds depending on complexity. The IHT and probate costs that result from no plan are typically far greater.
Do my parents need to involve me in their estate planning?
It often helps. Open conversations about expectations reduce disputes after death, and being named as executor or attorney requires understanding the role in advance.
What is the difference between a will and a trust?
A will sets out what happens to your assets on death. A trust is a legal arrangement that holds assets on behalf of beneficiaries, it can take effect during your lifetime or after death, and is used where ongoing control, protection, or staged distribution is needed.