Estate

If you are making a Will, it is important that you have some idea of the value of your estate now and also what it might be in the future. Do those sums and you will also know what kind of tax planning you may need to consider to allow your family to cope with any inheritance tax liability that may arise on your death.

Inheritance tax is payable at the flat rate of 40% on the value of your estate over a set threshold (£285,000 in 2006-07). However, there are many exemptions and many ways to mitigate the impact of this tax, provided you plan ahead. Remember that all your tax-efficient investments such as PEPs and ISAs also become part of your estate and potentially taxable on your death.

On death your estate will be administered by one or more executors who value the estate and obtain what is known as a 'grant of probate' (An official court document giving the executors authority). They realise the assets, pay off any debts and then distribute the estate to the beneficiaries in accordance with your will.

So what's your estate likely to be worth? Your assets may include:

• Your home - in your sole name or jointly owned?
• Bank and Building Society accounts
• National Savings investments
• Life Assurance policies
• Pension Fund and Union Benefits on death
• PEPs and ISAs
• Stocks and shares
• Unit Trust investment
• Premium Savings Bonds
• Furniture
• Interest in other people's estates
• Property & bank accounts abroad

Against your assets, you need to set off your liabilities:

• Outstanding Mortgage
• Bank Overdraft
• Credit card debts
• Out-standing loans
• Other credit facilities