Soft Succession Planning

Soft Succession Planning

Too often when I am sat with clients, we focus on the ‘hard facts’ in estate planning – how much their estate is worth, who owns what and of course tax- and cost-efficient ways of passing wealth to the future generations.  These are all vital parts of the process but it doesn’t end there.  We need to dig deeper into what I call the ‘soft facts’ to make sure we end up with what the client really wants to achieve.

Families are complex beasts with complex issues.  How is it going to impact a beneficiary when they receive what could be a large sum of money?  The industrialist and philanthropist, Andrew Carnegie, said “Why should men leave great fortunes to their children?  If it is from affection, then it is misguided affection because great sums bequeathed often work more for the injury than the good of the recipients.”  Admittedly that was said at the beginning of the 20th century and most of us haven’t got huge fortunes to leave.  But the sentiment is there.

A more recent example is that together Warren Buffett and Bill Gates have established the Buffett-Gates Giving Pledge which has resulted in many billionaires pledging most of their wealth to charity. In wanting the best for our children, maybe because we did not have that privilege ourselves, could we affect our children’s self-reliance, ambition and ultimately their self-esteem or hunger to work?  The values we pass on to our children, and the education and life experiences we encourage them to have, including learning how to become financially savvy and astute, are all part of life’s challenge.

What if beneficiaries have dependencies that could be catastrophic for them if they inherited large, or even small, sums of money?  I’m talking about alcohol, drugs or gambling addictions or indeed other socially-debilitating issues.

What if the client doesn’t really like or trust their daughter-in-law?  What if their son-in-law has money problems or his business is a little shaky?

Detailed meetings to really delve into the details are the only way to get to the bottom of it all.  Sometimes those can be ‘family’ meetings.  It is important to establish the values of that family and sometimes it is important to involve the next generation to ensure everyone is aware of the family expectations as well as preparing our children and other family members to handle and manage their inheritance.  This can be particularly pertinent with regard to family businesses and farms.

As you can imagine, the ‘softer issues’ are often harder to resolve than their ‘harder’ counterparts.  Proper estate planning, where the estate planner is prepared, experienced and qualified in teasing out that information from their clients, is key.  Make sure you feel comfortable with the estate planner you have chosen as, if they are doing their job correctly, you should be sharing information with them that is relevant but probably quite personal. 

What happens to my beloved pet when I die?

What happens to my beloved pet when I die?

I am a doggie person; some people prefer cats. There are of course many other varieties of pets, but we are undeniably a nation of pet lovers.  My beloved boy, Finley, the little rescue dog we collected eight years ago, is my ‘world’ now that my children are up and away and has been joined by another friend called Flora. What happens to them if both my husband and I were to die together is extremely important to me. 

I am not alone; over 45% of households in the UK own a pet but that statistic is from 2018 and I can only think that percentage would have grown during the pandemic.  I know from my many home visits that virtually every pet owner feels the same way I do about their pet.

However there are a few things to consider to ensure they are cared for after our death.  The Administration of Estates Act 1925 defines domestic animals as ‘personal chattels’ and therefore your pet can be gifted just as you would gift any of your other possessions.

Sometimes I get the impression that a client is gifting their pet quite easily at their death and I worry that the recipient does not feel quite so happy at being given such a responsibility if and when that time comes.  So, you must make sure that person is fully aware they have been nominated as the guardian of your pet.  You may be gifting an old or infirm pet or a pet with a long-life span such as a parrot or a tortoise.  Has your proposed guardian considered the task ahead?

Of course, the cost of housing, feeding and caring for a pet must also be considered as it can be a sizeable amount.  For example, a horse could need livery, or at least stabling.  You would not want your guardian to refuse to care for the animal simply due to lack of funds.

The clauses that can be used within your Will to achieve the appropriate care for your pet are varied.  They could range from a lump sum to the guardian on the condition of caring for your pet through to a regular income to the guardian.  Again, the clauses need to be carefully considered to encompass all the pets you own at the time of your death, or specific pets, depending on your wishes.  It is probably a good idea also to have a reserve guardian, just as you would for your children, in case your first choice is unwilling or unable to act as your pet’s carer.

I have been asked by clients if they can leave a gift of money to a pet.  This is not possible as the pet cannot take receipt of the money nor can it open a bank account!  Instead the gift must be left to the guardian.

Sometimes there is simply no one to whom we feel we can leave our pet.  In those circumstances, certain charities, both local and national, will provide rehoming schemes.  To name a few, the national charities are: the RSPCA’s Home for Life, the Cinnamon Trust and The Dog’s Trust.  If you are considering using these services, often the charities concerned require certain wording to be included within your Will.  Of course, it would be appropriate, although not essential, to leave a donation to that charity on condition of rehoming your pet. Please don’t forget how important legacies are to charities to continue their excellent work with our strays and other specific projects.

And finally, your Will should include what happens to the legacy in your Will if your chosen caretaker does not take on the responsibility of your pet or, indeed, you outlive your pet.

As ever, it is essential that you take appropriate advice in drawing up your Will.  Personally I believe it helps if the estate planner concerned is an animal lover!


Are you just about to get Married OR Separated OR Divorced?

Are you just about to get Married OR Separated OR Divorced?

If so, then you’d better know how each affects your Will.


Marriage is one of the few events that REVOKES a Will.  Not many realise this in the excitement of the nuptials. So, if you had a Will before your marriage, it is now null and void.  If you don’t make a new Will after your marriage, you will now die ‘intestate’.  You can make a Will ‘in contemplation of your marriage’ but there must be genuine intent and your partner must be known by you as your ‘intended’, rather than there being just an open-ended wish or hope!  This would mean the appropriate wording being included within your Will when it is written.

Getting married should be a trigger to review your Will or to write your first Will anyway as your spouse-to-be will have different rights and your obligations to them will differ from being those of just ‘a partner’.


Separation is never an easy time and it may mean that you are potentially on the road to divorce.  But, as far as your Will is concerned, you are still married and whatever your Will says will still happen if you die before you are divorced.  Your spouse still has the same rights. If you haven’t got a Will and you die when you are separated from your spouse then you die ‘intestate’ and the Laws of Intestacy would give your spouse the same from your estate as if you weren’t separated.  The end result could be that your spouse ends up with all your estate.  Most divorce lawyers will recommend that you rewrite your Will as soon as possible to stop both the Law of Intestacy or your current Will resulting in your spouse inheriting your estate, if you die before your divorce.


Once divorced, the general rule is that it is as though your ex-spouse has predeceased you.  So, if you still don’t rewrite your Will once you are divorced, your old Will will still be valid (divorce DOESN’T revoke a Will) but your ex-spouse will be viewed as though they have already died.  So, if your ex-spouse is an executor of your Will, they no longer will be now that you are divorced and your reserve executor will act instead.  If your ex-spouse stands to inherit from your Will, at your divorce the gift will fall to whoever would have received it if your spouse had died before you.  Any powers given to your ex-spouse in the Will will no longer stand as it will be deemed that they have predeceased you.

Of course, if you don’t have a Will, an ex-spouse does not inherit at all according to the Laws of Intestacy.

What many do not realise is that being divorced only means that the marriage is dissolved.  It does not stop any financial agreements or claims, nor does it affect the rights of birth parents.  Do-it-yourself divorces are becoming quite common and where the divorce is relatively amicable, many choose this option as it is significantly cheaper than involving divorce lawyers.  However, what many do not realise is that by not using a professional, there will be no full and final financial settlement in place and, because of that, your ex-spouse has a legitimate claim on your estate at your death.

Joint Assets

It is worth remembering that any assets that are held jointly, including both property and bank accounts, will automatically pass to the remaining joint owner at death.  It is irrelevant whether you and the other joint owner are married, separated or divorced.  This is because the asset passes according to the Law of Survivorship which surpasses the Law of Intestacy and is not affected or controlled by your Will.

As ever, it is always worth getting legal advice if you are considering either marriage, separation or divorce as it will affect your estate.


Do you really know what happens if you die without a Will?

Do you really know what happens if you die without a Will?

I think we all know that dying without a Will is not a good idea but do we really know why?  Most people think of the potential financial hardships but there are more emotional and emotive reasons also.

Let’s start with what happens if you die without a Will and who gets what.  Dying without a Will is called dying INTESTATE.  There are statutory laws – called the Law of Intestacy – that govern how your estate will pass if you die without a Will.

Remember that any assets owned jointly will NOT be governed by your Will or the Law of Intestacy.  Instead, those joint assets pass by the Law of Survivorship, i.e. the remaining joint owner(s) get the lot. So, if you and your partner/spouse own everything ‘jointly’, should you die, your partner/spouse gets everything. However, anything not owned jointly (i.e. any assets solely owned by you) will fall according to the Law of Intestacy.

So, now it depends on whether you are married or not?  If ‘yes’, then the next question is ‘do you have children’?  If ‘no’, then your spouse inherits the lot but don’t forget that is also the case if you are separated but not yet divorced.

However, if you do have children, it gets a little trickier. Your spouse will receive the first £270,000 of your estate.  So, if you do not solely own more than £270,000 your spouse receives your entire estate.  However, if your estate is in excess of £270,000 that excess balance will be split 50% to your spouse and 50% to your children (held in trust until they are aged 18).  Your personal chattels go to your spouse.

If you are not married, it gets even trickier.  If you have children, they receive your entire estate, NOT your partner – even if your partner is the parent of your children!  If you don’t have any children, your parents will receive your entire estate – these monies may end up going on their care fees.  If your parents are not alive, your estate falls to your siblings and of course down to their children (your nieces and nephews) should your siblings die before you.  Do you really want your nieces and nephews to inherit rather than your partner to whom you aren’t married?

If all that fails, the next level down is to your half-siblings, then grandparents and then aunts/uncles and of course their children should they die before you. If all that fails… then your estate passes to The Crown!!

So, you can see why the Law of Intestacy is often called a ‘blunt instrument’!

There are other aspects that are often not thought about.  If you haven’t got a Will then you haven’t nominated your own Executors and Trustees.  The former are the people to whom you give the responsibility of administering your estate and body.  The latter, often the same people, are those who manage monies and trusts on an ongoing basis. If you haven’t nominated your own Executors and Trustees then it will be down to those closest to you to act as your Administrator.

There are strict rules as to who can apply to be your Administrator. The order is as follows: the surviving spouse where the deceased was married or in a civil partnership; children of the deceased; grandchildren; surviving parents; surviving brothers or sisters; nephews or nieces; another relative.

Let’s take a look at that list.  What if you don’t like or trust or get on with any of those people?  They are now in charge of disposing of your body, organising your funeral, distributing your money, liaising with the family and the ongoing management of money and trusts.  Are there any people on this list within your family who you would not like to act in such a way on your behalf?

What about all the aspects of your life that won’t be reflected in the Law of Intestacy?: gifts to family and friends; gifts to stepchildren; care of pets; gifts to charity; guardianship of children; ongoing management of your business; excluding estranged beneficiaries; tax planning… to name but a few.

Heartache, family disputes and financial hardships may all occur at what is already a very difficult time.  Do you want that for your loved ones?  No, of course you don’t, so go to the effort and expense of having a well-crafted Will to make sure your wishes are adhered to.

A million pounds tax free? – I don’t think so!!!

A million pounds tax free? – I don’t think so!!!

Are you aware the Inheritance Tax laws changed on April 6th 2017? Are you one of the many who now believe they have £1 million before they pay any inheritance tax? You are most probably wrong! Do you have children / grandchildren (direct lineal descendants)? Are you married? Do you have a property that you live in or have lived in (a qualifying residential interest)? How much debt do you still have on your property? All these factors contribute to whether you will get the extra Residence Nil Rate band. Confused yet?

As an attempt to satisfy the promise of £1 million inheritance tax-free, the new Residence Nil Rate band was introduced in April 2017. Experience to date shows that many people are under the misconception that everyone now has £1 million and it really is not that simple.

Everyone has their own tax-free allowance of £325k (‘ordinary nil rate band’) which has been fixed until April 2026. As the survivor of a married couple, you will benefit from your spouse’s £325k (‘transferable nil rate band’), providing they haven’t used any of it up at their death or with lifetime gifting. So, when you have both died, your family will benefit from £650k before tax is paid.

Each individual now has an additional £175k (‘residence nil rate band’), again fixed until April 2026, to pass on to their family, inheritance tax-free, but they must pass it to direct lineal descendants: children, grandchildren, adopted children, stepchildren, foster children, spouses of deceased children provided they have not remarried. What if you do not have any direct lineal descendants? You will not qualify for this extra allowance. Unfair?

The additional allowance must be in the form of property (or if you have downsized since 8 July 2015) that you live in or have lived in (i.e. excluding buy-to-lets, unless you had previously lived in it). That property can pass to your spouse at your death. Then, at your spouse’s death, your estate will get both your allowance and your spouse’s allowance (i.e. a transferable residence nil rate band). This will mean that as a married couple you will have £1M before inheritance tax is payable; the 2 ordinary nil rate bands of £650k plus the 2 Residence nil rate bands of £250k. If you are unmarried, beware! If you pass your property to your partner at death and then on to your children, you will lose one allowance. Unfair?

The value in the property is also a consideration. The value is the net value i.e. minus your mortgage. So you may own a £350k property as a married couple but you have a £250k mortgage. Hence only £100k (between you) rather than £350k will qualify for the additional allowance.

Trust planning within Wills is common and very useful. However, beware, some trusts will disqualify you from the new allowance. Specialised estate planning is required to ensure you still retain the benefit from trust planning as well as the additional tax allowance.

As you can see it’s a minefield. So, don’t assume the inheritance tax free allowance you think you will get and seek proper legal advice.