5 Threats to an Estate

Estate planning is an important consideration for anyone who wishes to ensure that their assets are passed on to their loved ones in the most efficient and effective way possible. However, there are several threats to an estate that people should be aware of when making their plans. In this blog post, we will discuss five of the most significant threats to an estate and what can be done to mitigate them.

1. Loss of wealth to the remarriage and/or divorce of the survivor

One of the biggest threats to an estate is the remarriage and/or divorce of the survivor. When one partner dies, all assets usually become solely owned by the surviving spouse/partner. However, if the survivor was to remarry/cohabit and make a new Will in favor of their new spouse/partner, the estate could pass entirely to the new spouse/partner, disinheriting any children. It is important to plan for this scenario to ensure that the estate is passed on to the intended beneficiaries.

1. Loss of wealth to the divorce of your chosen beneficiaries

If chosen beneficiaries later become subject to divorce proceedings, then half of their inheritance is at risk to any divorce settlement. It is essential to consider this possibility when making estate plans and to put in place measures to protect the assets from any future divorce proceedings.

1. Loss of wealth to creditor claims on your chosen beneficiaries

If the surviving spouse or partner is subject to creditor claims or bankruptcy, then the inherited estate is fully at risk. Similarly, any inheritance passed absolutely to the chosen beneficiaries is also fully at risk to creditors and bankruptcy. It is crucial to consider this possibility when making estate plans and to put in place measures to protect the assets from creditor claims or bankruptcy.

1. Loss of wealth to fund an Inheritance Tax liability of a beneficiary

When a Will passes assets to children or other beneficiaries absolutely, this increases the size of their respective estate and could impact their own inheritance tax liability. It is essential to consider this possibility when making estate plans and to put in place measures to mitigate any inheritance tax liability.

1. Losing your home and/or savings to long-term care home fees

A person’s home and assets are at risk to fund the cost of care during their lifetime. If an estate has been passed to beneficiaries absolutely, these assets could also later be assessed for their own care costs and ultimately lost. It is crucial to consider this possibility when making estate plans and to put in place measures to protect the assets from long-term care home fees.

In conclusion, there are many threats to an estate that people should be aware of when making their plans. It is important to consider these possibilities and to put in place measures to protect the assets from any potential loss. By doing so, you can ensure that your assets are passed on to your loved ones in the most effective and efficient way possible.