Estate planning is the process of ensuring your assets go where you want them to, your financial affairs are managed if you cannot manage them yourself, and your family is not left dealing with unnecessary delays, costs, or tax bills. In the UK, the core components are a valid will, a Lasting Power of Attorney (LPA), and a basic understanding of Inheritance Tax. Failing to plan costs UK families billions each year in avoidable tax and legal fees. This hub covers everything you need to know.
Key estate planning figures for 2026/27
| Element | 2026/27 figure |
|---|---|
| IHT nil-rate band | £325,000 |
| Residence Nil-Rate Band (RNRB) | £175,000 |
| Combined threshold (including RNRB) | Up to £500,000 (single); up to £1m (couple) |
| IHT rate above threshold | 40% |
| Reduced IHT rate (10%+ to charity) | 36% |
| Annual gift exemption | £3,000/year |
| LPA registration fee (each type) | £92 |
| Deputyship application fee | £371 + annual supervision £320–£775 |
| Probate Registry fee (estate over £5,000) | £300 |
| DIY will kit | £10–£40 |
| Solicitor simple will (single) | £150–£300 |
Wills — the foundation of estate planning
A will is a legal document that sets out what happens to your estate (property, money, possessions) when you die. Without one, the intestacy rules apply — which may not reflect your wishes and provide nothing for an unmarried partner.
A valid will in England and Wales must:
- Be in writing
- Be signed by the person making the will (testator)
- Be witnessed by two people who are present at the same time and are not beneficiaries (or married to beneficiaries)
A witness who is also a beneficiary loses their gift — a common DIY will mistake that can be costly.
What a will should cover:
- Executor(s) — who administers the estate
- Beneficiaries — who inherits what
- Guardians for minor children
- Specific gifts (jewellery, property, sentimental items)
- Residual estate — who receives what is left after specific gifts
Lasting Power of Attorney — the document everyone needs
An LPA allows a trusted person (your attorney) to act on your behalf if you lose mental capacity due to illness, accident, or dementia. There are two separate LPA types:
| LPA type | What it covers | When it activates |
|---|---|---|
| Property and Financial Affairs | Bank accounts, bills, investments, property sales | Can be used immediately or only on incapacity |
| Health and Welfare | Medical decisions, care arrangements, life-sustaining treatment | Only when you lack capacity |
Both types must be registered with the Office of the Public Guardian before they can be used. Registration costs £92 per LPA.
Set up an LPA early. Once you lack mental capacity, you cannot grant an LPA — and your family must apply for Deputyship instead, which costs more and takes 6–12 months.
Inheritance Tax planning — a worked example
David and Sarah own their home jointly (value £520,000) and have combined savings of £180,000. They have two adult children.
Estate value: £700,000
| Tax calculation | Amount |
|---|---|
| David’s nil-rate band | £325,000 |
| David’s RNRB (property to children) | £175,000 |
| David’s total threshold | £500,000 |
| Sarah inherits everything — IHT on first death | £0 |
| On Sarah’s death: estate = £700,000 | |
| Combined nil-rate bands (both transferred) | £650,000 |
| Combined RNRB (both transferred) | £350,000 |
| Total combined threshold | £1,000,000 |
| IHT payable | £0 (estate £700k is under £1m) |
Without understanding the transferable allowances, some families pay IHT unnecessarily. The key: ensure both partners’ unused nil-rate bands are formally claimed on the second death.
Probate — when and how it applies
Probate is the legal process of administering a deceased person’s estate. A Grant of Probate (if there is a will) or Letters of Administration (if there is no will) is required to access most financial accounts above £50,000 (exact threshold varies by institution) and to transfer solely owned property.
| Probate route | Typical cost | Timeframe |
|---|---|---|
| DIY probate application | £300 (Probate Registry fee) | 4–12 months |
| Solicitor-managed probate | 1–3% of estate value | 6–18 months |
| Specialist probate service | Fixed fee £1,500–£5,000 | 6–12 months |
Jointly held assets (property, bank accounts) pass automatically to the surviving owner by right of survivorship — probate is not needed for these.
Cluster articles in this section
Related hubs
- Pensions and Retirement Hub — pension beneficiary nominations, drawdown
- Tax Hub — Inheritance Tax, Capital Gains Tax
- Life Events Hub — bereavement checklists, financial steps after a death
- Money by Age Hub — when to set up LPA, decade priorities