The largest wealth transfer in history is still continuing to influence the industry in a variety of ways from technology to tax.
Planning for an inheritance is a necessary tool in financial advice, however families are still failing to have those conversations.
Sue Wakefield, director at Zedra, told International Adviser: “However much I encourage families to talk about inheritance, it’s still not happening enough.
“I’ve actually been in the industry for over 30 years, and the first thing I always say to clients is ‘have you spoken to your children about…’, whether it’s gifting, setting up a trust or creating a Will. Often the answer is ‘no’.
“I think there’s still quite a taboo around money and having those conversations. That, for me, is still the biggest issue.”
Wills
Despite the lack of family discussions about such important topics, the tragedies during the pandemic highlighted the need for people to create a Will. There is no such thing as too early.
Wakefield said: “Suddenly, through the pandemic, we’ve dealt with so many clients that haven’t had Wills and died intestate. Families vulnerable, bereaved, and with no Will is one of the worst situations.
“We’ve had a real campaign on Will writing and drafting. The pandemic has addressed minds generally about mortality, far more younger people have come forward.
“Those conversations are happening. But often, when we’re talking to people about Wills, they’ll say, ‘I don’t want X person to share, because I’ve already given them enough money, but I want all this to go to Y’.
“But they haven’t had the conversation with the inheritors and don’t realise they need to. They do because it would be a great opportunity to talk about it and actually put some other plans in place.”
Eradicating the taboo association
Death is not a nice topic. But it is something that high net worth clients need to talk about because it is part of life.
So, how can the industry stop the taboo association around talking about inheritance and Wills?
Wakefield believes younger people are prepared to talk to parents about it, the more parents will be open.
She said: “I think it probably is better than 30 years ago, but undoubtedly everything needs to be more open. The traditional model of financial planning probably should change and it is already moving away from those very structured and rigid conversations held behind closed doors.
“The pandemic has helped in that respect because one of the things that we’ve done is encourage families to bring the next generation with them to attend these types of conversations. When we’re doing Will drafting calls, we will always say ‘are you inviting your children to sit in your living room with you?’, so that we can then engage with the whole family.
“The industry needs providers to increase that exposure to the next generation and start those conversations.”
Disputes
If conversations do not happen among families, potential inheritors are left to assume the figure of their wealth transfer and sometimes they may get as much as they thought they would or nothing at all.
“A lack of communication and a misunderstanding of their entitlement leads to more dispute cases,” Wakefield added.
“When we’re drafting Wills with clients who have complex families and where there is potential for a claim, we always emphasise how important it is to have a reverse note as to why you’re leaving somebody out of your Will as there could be potential to challenge it later on.
“There is an increase of people with very fixed views on who they want to inherit and why it’s not a simple case of ‘I’ve got three children and they all get the same’.
“There is a real testamentary freedom here and they’re making good use of it. But equally important on the other side, when you see those beneficiaries that have assumed they are getting something and in fact are not, to actually be able to explain to them the reasons for this is so important.”
