Estate planning isn’t always about passing wealth to a spouse or direct relatives.
In fact, more people are choosing to leave some – or all – of their estate to their ‘chosen family’. Research cited by Today’s Wills and Probate (29 January 2026) found that, of those surveyed, 1 in 8 have named a non-blood beneficiary on a life insurance policy, such as close friends, unmarried partners, mentees, or charities that matter to them.
If you want to ensure your chosen beneficiaries inherit your wealth, careful estate planning is essential. Not only can this help make your wishes clear, but it may also reduce a potential Inheritance Tax (IHT) bill.
Here are four effective ways to pass wealth to your chosen family – and what you need to consider.
What is a ‘chosen family’ in estate planning?
Your chosen family refers to the people you decide to include in your estate, regardless of whether they are blood relatives.
This might include:
- Close friends
- An unmarried partner
- A godchild
- Charities or community organisations
Without a clear plan, these individuals may not automatically inherit anything from your estate – which makes planning even more important.
1. Name them as beneficiaries in your will
If you want to leave assets to someone outside your immediate family, writing a valid will is essential.
Without one, your estate will be distributed according to intestacy rules, which follow a strict order of relatives. This means your chosen beneficiaries could receive nothing.
By naming them in your will, you can decide exactly:
- Who inherits your estate
- What they receive
- How your assets are divided
This could include property, savings, investments, or personal possessions.
It’s also important to keep your will up to date. An unclear or outdated will can lead to disputes – particularly if family members contest it. Challenges to wills have risen significantly in recent years, often due to concerns around the validity of them. According to MoneyWeek (23 October 2025), in the five years to 2024/25, attempts to have a will ruled as invalid surged by 61%.
2. Gift assets during your lifetime
Another way to pass wealth to your chosen family is by gifting assets while you’re still alive.
This approach allows your beneficiaries to benefit sooner and may reduce the risk of disputes after your death.
From a tax perspective, gifting can also help reduce your estate’s IHT liability. In many cases:
- Gifts made more than seven years before death fall outside your estate
- You can gift up to £3,000 each tax year using your annual exemption
- Certain regular gifts may also be exempt
However, giving too much could affect your own financial security, so it’s important to strike the right balance.
3. Nominate them in your pension expression of wishes
Your pension can be a powerful estate planning tool – and it doesn’t usually follow the instructions in your will.
Instead, you can nominate beneficiaries using an expression of wishes form. This tells your pension provider who you’d like to receive any remaining funds.
You can name:
- Individuals
- Multiple beneficiaries
- Charities
While this isn’t legally binding, it gives pension trustees clear guidance when distributing your funds.
It’s also worth considering the tax implications. For example:
- Beneficiaries may pay Income Tax if you die after age 75
- From April 2027, pensions are expected to form part of your estate for IHT purposes
Keeping your nomination up to date is key as your circumstances change.
4. Use life insurance to protect your chosen family
Life insurance can provide a guaranteed financial safety net for your chosen beneficiaries.
Unlike other assets, which may reduce over time, a life insurance policy pays out a fixed lump sum when you pass away – provided premiums are maintained.
This can be especially valuable if you want to provide certainty, your estate value may fluctuate or you’re concerned about future care costs reducing your wealth.
Placing a policy in trust may also help reduce IHT liability and ensure the payout goes directly to your intended beneficiaries.
Key considerations when leaving wealth to non-family
Before making any decisions, it’s important to think about:
- Clarity – are your wishes clearly documented?
- Tax efficiency – could your estate face an unnecessary IHT bill?
- Fairness – could your decisions be challenged?
- Financial security – are you giving away more than you can afford
A well-structured plan can help ensure your chosen family is protected while avoiding unintended consequences
Why estate planning matters for your chosen family
Unlike spouses or direct relatives, your chosen beneficiaries don’t have automatic rights to your estate.
Without proper planning:
- They may receive nothing
- Your estate could face delays or disputes
- A larger portion of your wealth could go to tax
Taking a proactive approach helps ensure your assets go exactly where you intend.
Get support with estate planning for your chosen family
Estate planning for your chosen family can be more complex than traditional inheritance planning.
A financial planner can help you structure your estate efficiently, reduce potential tax liabilities and ensure your wishes are clearly documented.
If you want to explore your options, get in touch to start building a plan that reflects what matters most to you.
Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate estate planning, tax planning, trusts, or will writing.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Note that life insurance and financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.
Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.
Remember that taper relief only applies to gifts in excess of the nil-rate band. It follows that, if no tax is payable on the transfer because it does not exceed the nil-rate band (after cumulation), there can be no relief.
Taper relief does not reduce the value transferred; it reduces the tax payable as a consequence of that transfer.
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