Should we discuss inheritance?

We can often find discussing money matters, like inheritance, a little uncomfortable. However, in some cases it is quite common and, as in my experience, we are starting to observe a changing attitude towards talking about property, finances, and death.

Talking to the next generation about their inheritance, your views and their expectations can be an important step in estate planning. Of course, it is ultimately a matter of personal preference, not everyone is comfortable discussing inheritance or even the prospect of death.

An open conversation can help to ensure there are no surprises, which may lead to complications in the administration of your estate. But a conversation can also help with lifetime planning, when arranging gifts or other tax planning steps, such as trusts and family investment companies.

Discussing inheritance can also be considered a normal and necessary part of business succession planning, particularly for a family business. We act for a number of clients where the business may be multi-generational and where capital will likely be transferred to the next generation. Knowing when and how that may happen, and how it may affect the business, is key.

There may also be individuals who may not benefit equally – or even at all – from inheritance, such as those not involved in the family business. Estranged children are not uncommon, and a conversation with executors about why they may not benefit equally to their siblings can help to deal with difficult conversation when the time comes.

We also see these conversations from the perspective of the beneficiary. With people living longer, inheritances may not be received until later in life, at which point it is important to understand what may be inherited for the sake of your own Will and financial planning. It might also be the case that testators will prefer to ‘skip’ a generation.

Discussions regarding inheritance can come about when making a Will. As a solicitor, I tend to focus on:

• What a person has: their assets and liabilities;
• Who they have: their family and dependants; and,
• What they want to do with it: what is going in the Will.

This helps to identify several things a person should be considering when making a will, including who should benefit and how, who might expect to benefit, and whether there is an Inheritance Tax problem (which is only really a “problem” if you do not want to pay it!).

All adults should consider making a Will, particularly if you are concerned about where your assets will go when you die. It may be that you do not think you have anything to give away but consider the risk of you inheriting and then dying shortly after, which is why a conversation about inheritance can help.

Wills should be reviewed at least every five years. However, there are also natural milestones that prompt review, such as marriage or a civil partnership, divorce, death (for example, following the death of a partner) and children coming into the picture. Wills may also be considered before a gift, particularly where parents are the one’s gifting and following inheritance.

Inheritance can be an important conversation to have with your loved ones, despite any awkwardness. Having an open and honest conversation about what you intend to give as a testator/testatrix, or indeed what you hope to receive as a beneficiary, can avoid any unpleasantness when the time comes, helping to ease the administration of the estate during what will undoubtably be an already difficult time.