Family estate planning: wills, retirement income and passing on wealth
01 October 2026
Passing wealth from one generation to the next is rarely a single decision made at the end of life. It is shaped over many years by how you own your assets, how you fund retirement and the arrangements you put in place for the people you want to support.
This is why family estate planning involves more than writing a will. Property, investments, savings and pensions can all be treated differently after death, while decisions about retirement income can influence how much wealth is eventually available to beneficiaries.
Considering your will alongside your wider estate plan, investments and retirement strategy can provide a clearer picture of how your wealth can support you throughout later life, while also helping you plan for a spouse or partner, children and future generations. If you're looking for a broader overview of what estate planning is, our introductory guide explains the key components that make up an effective estate plan.
The role of a will in estate planning
A will is one of the foundations of a good estate plan. It allows you to set out who should inherit assets within your estate and appoint executors to administer your affairs. For parents, it can also be used to nominate guardians for children under 18.
Without a valid will, assets that would otherwise pass under your will be distributed under the rules of intestacy. These rules vary across the UK and may not produce the outcome you would have chosen. In England and Wales, for example, an unmarried partner who is not your civil partner has no automatic right to inherit under intestacy, regardless of how long a couple has lived together.
However, writing a will is only one part of estate planning. A will does not necessarily determine what happens to every part of your wealth. Pensions, jointly owned property and assets held within certain trusts can follow different arrangements.
Effective estate planning solutions therefore involves looking beyond the will and understanding how each asset is owned and how it could eventually pass to the people you care about.
Tax Treatment
Tax Treatment
The tax treatment depends on the individual circumstances of each client and may be subject to change in the future.
Why a power of attorney matters alongside a will
A will only takes effect after death. It doesn’t cover who manages your money, property or care decisions if you lose the mental capacity to do so yourself while still alive.
In England and Wales, a Lasting Power of Attorney (LPA) lets you appoint one or more people you trust to make decisions on your behalf. There are two types: Property and Financial Affairs, and Health and Welfare. You can put one or both in place. Without an appropriate power of attorney, someone may need to apply to the Court of Protection to manage your finances if you lose capacity, which can take time and involve additional costs. Different arrangements apply in Scotland and Northern Ireland.
Given that later-life planning already needs to account for the uncertainty of care costs and changing needs, putting powers of attorney in place should be considered alongside writing a will.
What happens to different assets when you pass away?
Property, investments and savings held in your sole name will generally form part of your estate and be administered by your personal representatives before being distributed to beneficiaries.
Joint ownership can work differently. In England and Wales, property owned as joint tenants passes automatically to the surviving owner and cannot be passed through the deceased owner's will. With a tenancy in common, each person owns a distinct share, which can be left to someone through their will.
Pensions require separate consideration. With many defined contribution pensions, you can complete an expression of wish form telling the scheme who you would like to receive any death benefits. The provider or trustees will usually take that nomination into account, although in many schemes they retain discretion over who receives the benefits. Keeping nominations updated is therefore an important part of family estate planning.
The treatment of pension wealth is also changing. From 6 April 2027, most unused pension funds and pension death benefits will be included in the value of an individual's estate for Inheritance Tax purposes. This may change how some families think about the role of pensions within their wider inheritance plans. For further information on pensions and Inheritance Tax, including the potential implications of upcoming rule changes, see our related content.
How retirement income choices can shape an inheritance
Estate planning and retirement are closely linked because the assets you draw on during later life influence what you can eventually pass on.
Someone approaching retirement might have a pension alongside ISAs, cash savings and other investment portfolios. Choosing which assets to draw from, how quickly to use them and how much to keep invested can all influence the eventual value and composition of an estate.
There is no universal order in which these assets should be used. The right approach depends on factors including your income requirements, tax position, investment objectives, attitude to risk and desire to leave an inheritance.
Retirement withdrawals also need to be sustainable. Drawing heavily from investments during a market downturn, particularly early in retirement, can reduce thow long your money lasts. Adjusting withdrawals as circumstances change, supported by cashflow modelling and regular reviews, can help manage this risk and sustain retirement income over time.
Good estate planning therefore considers not only what you would like to leave, but what you are likely to need yourself first.
What happens to an annuity when you die in the UK?
An annuity allows you to exchange some or all of a pension pot for a guaranteed income, usually for life. What happens to that income after your death depends on the options selected when the annuity is purchased.
With a standard single-life annuity, income will usually stop when the annuity holder passes away. A joint-life annuity can instead continue paying some or all of the income to a surviving dependant, such as a spouse or partner.
It is also possible to add a guarantee period. For example, if someone chooses a ten-year guarantee and passes away after seven years, payments can continue to their beneficiaries for the remaining three years, or the equivalent may be paid as a lump sum depending on the arrangement. Value protection is another possible feature, allowing beneficiaries to receive a lump sum where the annuity has paid out less than the amount originally used to purchase it, subject to the level of protection selected.
For anyone considering an annuity as part of their estate plan, the trade-off is important. Adding protections for beneficiaries will usually reduce the starting income available to the annuity holder. Annuity choices should therefore be considered alongside both retirement needs and the financial position of a surviving spouse or partner.
Balancing retirement security with leaving an inheritance
The desire to pass wealth to children or grandchildren needs to be balanced with the uncertainty of later life.
Retirement may last several decades, while inflation, investment markets, unexpected expenditure, and the potential cost of care can all change the amount of money you need.
Cashflow modelling can help you understand this balance. By looking at expected income, spending, assets, and liabilities over time, it can test different scenarios and indicate how much capital you may need to retain.
Planning for a spouse, children and future generations
Passing wealth across several generations can create competing priorities.
You may want to make sure a surviving spouse or partner can maintain their lifestyle while also preserving assets for children or grandchildren. This can become particularly important in blended families or second marriages, where different beneficiaries may have different needs.
A combination of wills, beneficiary nominations, trusts, investment arrangements and other estate planning tools may help families achieve these objectives. The appropriate structure will depend on individual circumstances, but the central principle is that each part should complement the others. Families considering trusts can find out more about how trusts work and when they may be appropriate within an estate planning strategy.
The same applies to estate planning and retirement. Decisions about guaranteed income, investment withdrawals or retaining capital should be made with an understanding of how they may affect both the surviving partner and later generations.
Keep your arrangements under review
An estate plan should change as your life changes.
Marriage, divorce, the birth of children or grandchildren, bereavement, changes in wealth and new retirement plans can all affect what you want your money to achieve. Tax and pension rules can change too, as the forthcoming change to the Inheritance Tax treatment of pensions demonstrates.
Your will, pension beneficiary nominations, asset ownership and wider financial arrangements should therefore be reviewed regularly and after significant life events.
Bringing retirement and estate planning together with Killik & Co
At Killik & Co, our Wealth Planning service can help bring investments, retirement and intergenerational planning together within one long-term strategy.
Our Wealth Planners assess your current financial position alongside your future goals. Lifetime cashflow modelling can then help answer questions such as when you can afford to retire and how much wealth you may realistically be able to pass on.
We bring these elements together in a financial plan that reflects your needs and goals, with support from our Tax and Trustee Services team where appropriate.
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