Whole of Life
Whole of life plans, also known as whole of life insurance or permanent life insurance, play an essential role in estate planning when used in conjunction with a will. These plans provide lifelong coverage, ensuring that a specified lump sum is paid out to the beneficiaries upon the policyholder's death, regardless of when it occurs.
When it comes to estate planning, a whole of life plan can serve several purposes and offer significant benefits:
Whole of life plans provide financial security to the policyholder's loved ones, as the payout can help cover various expenses, such as funeral costs, outstanding debts, or inheritance tax liabilities.
By incorporating a whole of life plan into your estate planning, you can leave a tax-free lump sum to your chosen beneficiaries, ensuring that your assets are passed on efficiently and according to your wishes.
If you have multiple beneficiaries, a whole of life plan can help ensure that each beneficiary receives an equal share of your estate, promoting fairness and preventing potential disputes.
In the UK, inheritance tax is payable on the value of your estate above the prevailing threshold. Whole of life plans can help cover the inheritance tax liability, ensuring that your loved ones don't face financial strain to settle the tax bill.
If you wish to leave a lasting legacy or make charitable donations, a whole of life plan can be an effective way to allocate a specific sum to your chosen causes.
When using a whole of life plan in estate planning, it's crucial to have a valid and up-to-date will that reflects your current intentions and preferences. Your will acts as a legal document that outlines how you want your assets to be distributed and appoints executors to carry out your wishes.
Working with a professional estate planner, financial advisor, or solicitor can help ensure that your estate planning is well-structured, tax-efficient, and aligned with your goals. They can assist in coordinating your whole of life plan with your will, identifying any potential tax implications, and making any necessary adjustments to optimize your estate distribution.