Despite greater understanding of the need for estate planning it can often be the element of advice that clients prefer not to tackle. Jon Dodson Redmill Advance, provides some practical tips on addressing their reticence.
I was watching an interview with a Hollywood A-lister last week and they were talking about their family and specifically their children. When the conversation moved to sharing their wealth with their children, the interviewee was adamant that they would leave them nothing on ethical grounds.
Whilst we may say this approach is not completely unheard of, it did get me thinking about the changing trends in the way we gift to our families.
We only need to step back 20 or so years (when I first started working with advisers and planners) to recall a time when gifting was almost exclusively done on death.
Now we see far more lifetime gifts transferred to children as individuals and couples look to share their wealth earlier. There’s a number of probable motivators for this including:
- More information and guidance available on Inheritance Tax
- Greater (and, let’s face it, better) interaction with planners and advisers
- Increased longevity and a desire to see our family enjoying the gifts we make to them in our lifetime
- Soaring house prices and corresponding deposits – if you want to help your children or grandchildren buy a property, you may be able to help them more by making the gift as early as possible
Yet after all of that, I think the area of advice I have seen ‘parked’ most often in recent years is estate planning. It can be a difficult subject to approach with a client in early meetings so the framing is all important but, despite increased longevity, it is underpinned by a certainty – as such, you can never know how urgent the need is.
One may argue that once they have acquired assets, estate planning moves up the accepted priority of needs significantly for almost all clients. It’s critical then that we can open these conversations with clients as soon as possible.
The outline of an approach we could take with a client may be…
- Engage them on the subject as soon as is practical in the relationship – make sure the consequences of parking it are clear
- Ensure that, in understanding the client, the conversation is deep enough to appreciate their values and what brings them meaning – they may be like our Hollywood A-lister above
- Ensure any plans for gifting are discussed and the client understands why it’s important – involve the family where it’s appropriate/relevant
- Make a robust plan and make sure the agreed objectives are clear and explicit
- Make sure all wills, PoAs and expression of wish/trust arrangements etc are reviewed in line with objectives and are up to date – the statistics tell us that we are still in a situation where only 40% of adults in the UK have made a will
- Make sure, where lifetime gifts are to be made, they are given expediently and in line with the client’s wider objectives – outside of exemptions, the longer a gift is left the more likely it is to be chargeable
- Use all available exemptions and allowances to make sure gifts are as efficient as possible
- Insure gifts where necessary and affordable
- Revisit the conversation regularly
For me, the trigger point for getting this right is in the first three bullets above. Being able to have a timely and emotional conversation of the required depth with a client promotes better understanding.
And better understanding always lead to better planning.
By Jon Dodson
Redmill Advance
This article was written for Professional Paraplanner: https://bit.ly/3NsvxHL
