Living in the grip of a global pandemic has prompted many people to get their financial affairs in order, particularly when it comes to leaving a family legacy. Careful estate planning and an up to date Will ensures that your wealth is divided among the people (or charities) you want to receive it.
Open to discussion
Families are becoming more and more open about their finances, with the COVID-19 crisis highlighting the need to discuss Wills and estate planning. According to a study conducted at the height of the pandemic, a third of people in the UK have either drafted a new Will or have amended an existing one as a result of the global health and humanitarian crisis we’re facing. The research highlights that this is also having a broader effect on families; nearly four out of five (78%) believe the pandemic will lead to more conversations about inheritance and estate planning within their families.
However, the pandemic has not spurred everyone to act. More than a fifth (22%) of people surveyed say they do not have a Will, and do not plan to draw one up. Worryingly, around one in ten say they believe doing so would be tempting fate.
If you don’t have a Will, your estate will be shared out in a standard way defined by law after you die. This may not take into account complex family set-ups, or if you wish to leave something to someone outside your immediate family. Having an up to date Will also makes it much easier for your friends and family to sort out your estate in the way that you wish – helping to avoid unwanted family disputes.
Wills and estate planning: complex family set-ups
Families can face major problems if there is not a Will in place, particularly as complex family set-ups are increasingly becoming the new normal. Nearly one in seven (13%) families in the UK now have a stepson, stepdaughter and/or adopted son or daughter as part of their family. Furthermore, a fifth (21%) of parents have been involved in two or more romantic relationships that have led to them being legally responsible for children to whom they have no biological link.
Step-children have no automatic right to inherit from your estate – only your biological children do and even that can depend upon whether you are married and the value of your estate when you die. Going through the estate planning process and documenting your wishes in a Will ensures your estate is distributed exactly how you would like it to be, and is therefore one of the best ways to avoid family disputes after your death.
Keeping it in the family
Rising concerns over marital health are also having a significant impact on estate planning. The study found that over two thirds (67%) of parents have decided to delay family inheritance planning for fear that their children’s marriages will end in divorce, with the likelihood of wealth and assets leaving the family estate.
The findings show that these worries are not unsubstantiated, with more than one in four parents (27%) having children who are separated or divorced.
With effective estate planning, however, you can have a say in how an inheritance is spent. For instance, you may want to consider establishing a trust that sets out instructions for precisely in what circumstances the money can be distributed. Examples might be:
- on a ‘milestone’ birthday
- for purchase of a house or flat
- to pay university or higher education fees and expenses
Discussing your options with an experienced financial adviser is key for ensuring that your assets are transferred to the right people whilst minimising inheritance tax liabilities.
Protecting your wealth for future generations
The majority (83%) of respondents questioned as part of the research commented that the experience of the coronavirus pandemic will encourage people to sort out their financial affairs and trigger them into drawing up new Wills.
Estate planning and Wills go hand-in-hand; our experienced financial advisers can help you put a plan in place for protecting your wealth for future generations and we can put you in touch with a trusted solicitor if you haven’t got a Will in place. Together we will ensure that your family legacy continues in the way that you’d like.
To discuss your Wills and estate planning requirements, please contact the George Square Financial Management team. Call us on 0115 947 5545 or send an enquiry here.
Source data: Research conducted by Consumer Intelligence for Handelsbanken in April 2020 with over 1,000 respondents. Information is based on our current understanding of taxation legislation and regulations.
Any levels and bases of, and reliefs from, taxation are subject to change. The rules around wills are complicated, so you should always obtain professional advice.