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Wills and probate: Creating a family-friendly financial plan for the future
In a busy world, our energies are normally focused on working through an extensive daily to-do list rather than spent contemplating our own mortality.
But then, the last few years have been anything but normal. The intense experience of Covid-19, with its inescapable soundtrack of uncomfortable news headlines, provided a sad and stark reminder of the fact that death comes to us all eventually.
Having pushed people into a position of contemplation, many were then driven to action, with a spike in will writing reported following the onset of the pandemic. This is reinforced by data from the UK Wills, Probate & Trusts Market Report 2022, produced by IRN Research, which points to strong growth in will writing in the prior 12 months. It suggests furthermore that this momentum will continue, swelling the will-writing market to a value of £2.4bn by 2025.
Separate research from Legal & General indicates that Covid-19’s influence on will writing was felt most keenly by those in younger age groups (who are less likely to already have a will in place). The insurer found that more than a fifth (22%) of respondents aged 16-24 strongly agreed that their perspective on will writing had changed since the pandemic.
Leaving the legacy you want
Despite this awakening, the same survey also highlights that, overall, testators remain in the minority. In fact, 53% of the population are without a will, and this figure is notably higher among women (59%) than it is among men (47%).
There will be a wide variety of reasons behind these statistics, but they paint a worrying picture in terms of family financial planning. After all, the two principle motivating factors for putting a will in place are to make sure assets are left to the right beneficiaries and to ensure that family are provided for.
Without a will in place, the risk of your estate not being apportioned in the way that you would want are greatly increased as intestacy rules will instead be used as a framework for the allocation of assets, with inheritance directed towards the surviving partner in a marriage or civil partnership, or close relatives.
However, these rules do not necessarily take into account certain family dynamics. If couples are not married, for example, then the surviving partner can be left with no claim and assets could even end up being passed to estranged relatives.
In the case of children, if there is a surviving partner, a child only inherits from the estate if it is valued at over £270,000, at which point they would then receive half of the value of the estate above this figure. However, this is only valid for biological or adopted children – step-children or foster children do not automatically have a claim.
Even with a will in place, things are not necessarily straightforward where families are involved. Research has found that as many as 3 in 4 people are likely to experience a will, inheritance, or probate dispute in their lifetime, and with conflict among siblings cited as the most common form of dispute, this has clear implications for ongoing inter-family relations.
The reasons behind such disputes are fairly evenly spread between claimants not being happy with their inheritance, suggestions that the estate is not being distributed properly, or accusations that the deceased either lacked testamentary capacity or that someone close to them coerced them into changing their will.
Avoiding costly conflict
Worryingly, the trend for conflict appears to be on the rise, with evidence of growing numbers of contentious probate cases. Observers have pointed to the correlation between this increase and an escalation in estate values fuelled by recent property price gains. This is evidenced by the fact that the UK government secured £6.1 billion through Inheritance Tax (IHT) receipts in the period from April 2021 to March 2022, which is £0.7 billion higher than in the same period a year earlier.
For claimants who might have been financially impacted by the pandemic, there is a suggestion that they would be more prepared to seek what they believe to be their ‘fair’ share of this expanded wealth.
As well as the personal damage that situations such as this can cause, there are also financial implications to consider. Disputes of this nature can be difficult to resolve, requiring complex negotiations and resulting in lengthy negotiations between parties. All the while, legal fees could be mounting up in the background, and claimants could end up eating into whatever inheritance they receive in order to settle these costs.
Managing probate will inevitably be a difficult area for any family since it comes in the wake of the death of a loved one. However, the likelihood of unforeseen problems or conflict can be reduced if, supported by trusted legal and financial expertise, an individual puts in place all the requisite, proper planning measures when they are alive and well.
The information contained within this communication does not constitute financial advice and is provided for general information purposes only. No warranty, whether express or implied is given in relation to such information. Vintage Wealth Management or its associated representative shall not be liable for any technical, editorial, typographical or other errors or omissions within the content of this communication.
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