Breaking The Taboo – Talking About Death

Millions of over-55s are potentially forgoing expert help because it involves discussing their own mortality.

Talking about death is rarely easy. Nevertheless, the importance of preparing for the end of life cannot be overestimated, and having a financial plan in place ensures that your family isn’t subjected to additional stress and upset at a difficult time.

But while it makes obvious sense to tackle these issues sooner rather than later, new research shows that half of people over 55 have not had a conversation with their loved ones about end-of-life finances. This could make locating bank accounts, insurance, investments and personal possessions much more difficult for surviving partners, family members or friends who are given responsibility for handling the estate.

The study also reveals that over 90% of over-55s have not discussed estate planning with a financial adviser, with a third saying this is because they are uncomfortable talking about their own death.2 Such reticence to talk openly is more likely to result in estate planning being put off until the last minute, by which time it may be too late to make a difference.

Putting the right plans in place can not only reduce the amount of Inheritance Tax (IHT) that needs to be paid out of your estate, but also reduce the likelihood of any misunderstandings about how you want things to be handled when the time comes. But as with most things in life, it pays to start thinking about this well in advance.

For instance, you can regularly gift up to £3,000 a year (£6,000 per couple) free of IHT. For larger gifts, you will need to survive seven years for that gift to be free of your estate for IHT purposes. Unlimited gifts from your surplus income can also be made IHT-free – so long as you can show that these don’t affect your standard of living. This is money which could help younger relatives get a head start in life. However, there are risks associated with losing control of property and other assets, which is another reason why you should seek financial advice.

Will to win

Of course, not all estate planning is about the mitigation of tax – of equal importance is the comfort and security of knowing that your loved ones will be provided for as you would wish. Writing a Will* is crucial in this regard; yet, for many people, making a Will comes right at the end of a long ‘to do’ list. Indeed, the research shows that half of people aged over 55 do not have a valid Will in place; and this rises to three quarters of those aged 45 to 54.

Disputes often arise when there is no Will and those closest to the deceased are not necessarily those entitled under the rules of intestacy. The rules do not, for example, recognize unmarried partners. So, a cohabiting partner who was neither married nor in a civil partnership with the deceased would lose out under intestacy. Another, increasingly common, cause for dispute is when a Will has become invalid due to a change in circumstances e.g. a divorce. This could result in parents or siblings of the deceased inheriting instead of the deceased’s partner.

The difficulties of dividing assets fairly among potential beneficiaries can also put some people off. However, failing to draw up a valid Will can end up costly or divisive; in extreme circumstances, it can even end up with a court case.

If you wish to exert greater control over the distribution of your assets, then you may consider establishing a trust, Trusts can be set up during your lifetime or through your Will after your death. Not only can a trust help avoid probate and a potential delay in benefits being paid out, but setting one up is a useful way of engaging your family in discussions about wealth – particularly in families where talking about money does not come easily. Again, this isn’t something that should be left to the last minute, and the tax considerations of setting up a trust can be significant, so it is important to seek professional advice.

Opening up

Clearly, aspects concerning end-of-life financial planning are not always easy to approach, but they are vital if future decisions are to be based on a clear understanding of your own wishes. Talking to your financial adviser about what you want to happen when you die may help you to leave more for your loved ones, and remove much of the burden and stress they could encounter when dealing with your estate. Moreover, it can be a positive experience which enables you to leave a lasting legacy that benefits the people you want it to.

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