Discussing inheritance with your heirs
With wealth for millennials set to double in the next 20 years, it’s time to get over the awkwardness and have the conversation now. One of the main reasons why people don’t discuss their inheritance wishes is that they assume estate planning is not for them. That it is only necessary if you are very wealthy.
Most of us would like to leave a legacy
But nothing could be further from the truth. Most of us would like to leave a legacy and if you want to ensure your wishes are followed, obtaining professional advice and planning is essential, whatever your circumstances.
New research[1] has highlighted 58% of UK adults admit they have never discussed inheritance matters with their loved ones – with the reluctance to do so equally split between men and women. The findings revealed that the main reason people shy away from it is because they don’t believe they have enough assets to consider it worthwhile (18%).
Getting older is the main prompt for thinking about such matters
However, for nearly half the population (49%), getting older is the main prompt for thinking about such matters. Other life events that have pushed people to confront it are: the birth of a child or the death of a parent (both 7%), followed by the COVID-19 pandemic or a health scare (both 4%).
And there are certain people who hold the key to unlocking these conversations, with 54% saying their partner is the preferred person to talk to, followed by 22% who feel most comfortable chatting things through with their children. Worryingly, only 2% say they have discussed it with a solicitor and only 1% have done so with a professional financial adviser.
Ready to start a conversation about inheritance?
The importance of an up-to-date Will
Making a Will provides a good reason to have a multi-generational family meeting about your inheritance wishes. Having an up-to-date Will is important for both you and your family. The truth is that having an out-of-date Will is as problematic as having no Will at all.
Once you have an up-to-date Will, talking it through with your professional financial adviser, they can then recommend a plan about how to approach your inheritance goals. Also remember, failing to prepare your children for what they may inherit can hinder their ability to handle money wisely.
Take advantage of the gift allowance
You can give away £3,000 each year and this will not be subject to Inheritance Tax (commonly called IHT for short). In addition, parents can gift £5,000 to each child as a wedding gift, while grandparents can give £2,500.
Gifting money regularly throughout the year can be a great way to financially help loved ones and can also reduce your IHT liability. Some people will find it hard asking for money, so try and speak to your children and grandchildren to find out if you can help them with something specific, such as a new car or school fees.
Let life events help you start a conversation
Life events, like a birth, adoption, marriage or a family bereavement can make people evaluate their own plans. Use these opportunities as a way of talking to relatives about how you would like to pass on your wealth.
Talk about later life care
Many people are worried about how they will pay for social care when they get older. As a result, people may be starting to plan for this earlier than previous generations. It’s important to talk to your family about the care you want so they stay true to your wishes. This could be an ideal time to introduce the subject of inheritance, as estate planning and later life care go hand in hand.
Talk about family heirlooms
If you find it hard to approach the subject of estate planning with your family then a good place to start could be talking about family heirlooms. People enjoy hearing stories about older relatives, even if they never had the chance to meet them. Talking about items that are important to you or were important to other family members can be a great way to start a conversation about estate planning.
Let’s talk about inheritance matters!
Some people find the idea of discussing inheritance uncomfortable and wrongly assume that planning in advance is complicated, but if you don’t discuss things before it’s too late the situation can become much more thorny in the future, particularly if there is a blended family or if there is anything unexpected in the Will. For more information about how we can help you, please contact us.
Source data:
[1] The research of 3,000 nationally representative UK adults was commissioned by Find Out Now in November 2021 on behalf of Brewin Dolphin.
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