A well-planned estate is the best safeguard against your loved ones experiencing any more disruption, anxiety, or confusion than they need to in the wake of your death. The alternative – dying intestate, or without a valid will – leaves the door open for significant delays to your partner, children, or any other beneficiaries receiving their inheritance, and it also deprives them of an important form of closure that comes from being recognised in your last wishes.
But there’s more to it than that. Estate planning – the process of writing a will, but also making your estate as tax-efficient as possible – is a complex subject, not just for you but for your loved ones, too. The most effective way to pass your money and assets on is to consult with experts – your family solicitor and, of course, an independent financial advisor – to ensure you’re making the best possible decisions.
After that, when your thoughts are in order, comes a step that is all too often missed: talking things through with your family.
Why talk about your will?
Talking about death and matters relating to inheritance doesn’t come naturally to many of us. For the most part, we’d prefer to skip the subjects altogether in favour of lighter, happier themes, but this means forgoing a crucial step in the process.
If you don’t talk about your will, then there is a risk that certain beneficiaries – or even loved ones who are not named as beneficiaries – will feel disappointed, or as though a promise or obligation has been broken. At times, this may lead them down the legal route in order to contest the will’s validity and obtain an outcome that they deem fairer. For others, it may never get that far, but they may be left with a lingering sense of resentment, sadness, and despondency toward your relationship.
But it needn’t go that far. Talking about your will ensures your loved ones are armed with practical, clear steps to take after your death, so they don’t need to fret over tasks like paying bills or obtaining important passwords while they are coming to terms with their grief.
What topics to focus on
Simply inviting the family to come round and gather at the dining room table to ‘talk shop’ isn’t necessarily the best way to approach it. Most of us would rather not launch into such a big conversation and, instead, would prefer to focus on a few key talking points in order to tick all the boxes without getting lost on tangents.
Many families are preoccupied with the subject of inheritance tax, not least of all because it’s common knowledge that making an estate as tax efficient as possible takes many, many years’ work and attention. What used to impact a relatively small percentage of the population now has a significant impact on many estates thanks to a threshold that has not been updated since 2009, despite high inflation. There have been talks to scrap inheritance tax for the sake of appealing to voters, but the cost to the government means this seems unlikely.
It’s natural for family members to want to understand what steps are being taken but, for obvious reasons, it’s incredibly difficult for them to broach the subject. For you, however, this offers the perfect segue into the conversation on inheritance.
Inheritance tax planning is multifaceted, and a tax-efficient plan looks slightly different for everyone. From gifting money to loved ones each tax year to creating trusts, reviewing your will and updating with a fresh one as and when it is needed, implementing the right life insurance option and streamlining your income, there are many things you can do – and involve key family members in.
Obviously, you’ll want to make sure you’ve got all your facts straight before you start the conversation, but we can help you to create an actionable, clear plan that makes sense to all involved.
Every will needs an executor – someone who has been appointed to carry out your wishes and ensure that the stipulations mentioned within your will are all adhered to.
An executor can be a professional, such as a solicitor, but most people will choose to appoint a close relative – a spouse, adult child, or sibling, for instance. Either way, you’ll want to ensure that everyone knows who your chosen executor is, and (perhaps) why you made that choice. For some people, this can be a more sensitive subject than it is for others. It’s better to set expectations and ensure everyone is on the same page now, rather than later.
While discussing the trusts you have created for loved ones falls under the umbrella of inheritance tax efficiency, the subject is sufficiently big and complex that it may well necessitate a conversation all of its own.
There is no one-size-fits-all when it comes to creating trusts with a view to minimising inheritance tax. It’s a common misconception that any money (or property) you put into any trust will be liberated from the burden of inheritance tax. There are many different types of trust to consider, from discretionary trusts to gift and loan trusts, bypass trusts and lifetime gifts, all of which have different implications for inheritance tax.
We regularly work with clients who are looking to take advantage of all the ways in which they can pass assets onto loved ones with the least possible impact from inheritance tax, and it’s a subject we are highly fluent in. We can navigate all the nuances of inheritance law with you and ensure you can return to your loved ones with a clear, reliable plan.
Explaining all the particulars to everyone involved may take some time, but it’s a conversation that needs to happen sooner rather than later.
Start with lower stakes
When it comes to inheritance, most people are naturally more preoccupied by finances and high-value assets like property and investments than they are by other aspects of an estate. That’s not to say everyone is money-minded and greedy, but that it’s only natural to focus on the bigger picture first, and the smaller details second.
But discussing the biggest issues first and foremost is like jumping in at the deep end. To get your loved ones used to the subject matter, consider homing in on specific pieces that you wish for them to inherit, and why.
A will isn’t just about listing beneficiaries and splitting your estate between loved ones – it’s also an opportunity for you to stipulate any other final wishes you have. Again, this isn’t an easy topic for any family to discuss, but it’s an important one – and it provides a more natural segue into the contents of the rest of the will, along with other practical details like where it’s stored, and what arrangements are in place in the days that follow your death.
Choosing to omit someone from your will – particularly if you believe they have certain expectations of an inheritance from you – is a tough decision to make, but there are many different reasons why you may have drawn this conclusion. It’s natural to want to minimise the decision and avoid talking openly about it with others, but this is likely to cause issues for your loved ones further down the line.
Explaining your reasonings, justifying your decision, and making a clear commitment to your decision are all key to avoiding major issues down the line. Disinheritance is a bitter pill to swallow, but disinheritance without any clear reasoning behind it will leave unanswered questions that plague the individual in question – and their loved ones – for the rest of their lives.
When should you bring the subject up?
Although it may be met with some resistance, removing the taboo from the conversation on inheritance is a rewarding thing to do. The sooner you can make your loved ones comfortable with the conversation, the easier it will be to ensure they are prepared.
Remember that even the best-planned estates need to remain flexible. Wills are rarely written, forgotten about for 50 years, then pulled out of the draw and granted probate without any issues. Major changes like births, deaths, marriages and divorces – or the acquisition of new assets that need to be accounted for – should all be considered prompts to redraft a will, and revisit with your financial advisor for an updated plan.
You may even wish to bring your appointed executor, partner, Lasting Power of Attorney with you to future meetings with your solicitor and financial advisor so that their knowledge remains up to date, and you both stay on the same page.
Whether you look at it from an emotional or practical standpoint, preparing your family for what to expect when your will is brought to light, and inheritances are passed onto your beneficiaries is the best way to avoid issues. While those practical steps won’t minimise grief, they will provide an invaluable shelter between your family and financial stress and upheaval, and ensure that, even after you’ve gone, you can continue to help them weather the storm.
Please note that the FCA do not regulate will writing, tax planning and trusts.