Caroline writes about a client “I have a friend who is 82 she has stage 4 cancer and was told it was terminal. She and I sat down about six months ago and I explained to her how she could use the spouse relief to save an inheritance tax bill of 40% on her estate which is substantial and to set up a Lasting Power of Attorney for both her health and well-being and financial affairs so that her attorneys could do things for her if she became incapable.
Her children have now come to me, my friend who I will call Margaret, is now on morphine and cannot be said to be of sound mind to implement my advice.
Luckily for them Margaret’s children are of one mind and are willing to enter into a Deed of Variation after their mother’s death to use the spouse exemption and save the tax. However, not all families are able to co-operate, and then the opportunity to plan could be lost.
I have another client who does not live in the UK. He has a significant business owned by a trust which was set up by his father many years ago. He asked me to write a report on the trust and what needed to be done to give him not only asset protection but also control over the investments and distribution to avoid what in this case would inevitably be a family dispute on his death. Because of the nature and circumstances of this case without prior planning it could quickly escalate into lengthy and costly litigation.
He has now had the report for just over two years but has dithered and delayed and now refuses to do anything unless we can first have a face to face meeting – which is now impossible due to the pandemic.
From my experience, family disputes are not uncommon and there needs to be a mechanism in place to resolving such disputes as soon and as fairly as possible if large chunks of the trust fund are not going to be wasted on professional fees and court expenses in trying to resolve it through litigation.
I see regular examples of greed, envy and jealousy when someone dies, and it is ugly. With careful planning most can be avoided, but people seem reluctant to address death and planning– even if death is staring them in the face – preferring to think that death will be postponed until the time is right to plan. But death waits for no-one!
If you want to save taxes on death and these taxes are significant then the sooner planning is done the better. There are still several exemptions and reliefs, but most people prefer to gamble on living – rather than planning now for death.”
Carolines point is sadly expectations about family members can turn into problems, as Caroline states “I see regular examples of greed, envy and jealousy when someone dies, and it is ugly. “It’s the same as our blog post about inheritances issues “I have never met a family that was united by its wealth.”
Drafting a Will whilst important is only part of the solution. It can take months and months to build a successful plan. Which means the discussion process should have started yesterday. It’s human nature to leave these things for tomorrow, or the next day or next week, next month, next year. Make a decision to start talking about succession and inheritance today.