Did you know that 10,000 families dispute wills every year? This estimate is supplied by solicitors, suggesting that the number of arguments that do not make it to court could be higher. Fortunately, only 150 (or so) disputes make it to a judge each year. However, many disputes are settled out of court and can still be expensive for the legal parties.
How can you ensure a harmonious inheritance process when you die? Below, our Carlisle financial planners offer three ideas to help avoid family disputes over your estate. We hope these insights are helpful. Please contact us for more information or to speak with a financial adviser:
t: 01228 210 137
e: [email protected]
#1 Write a robust will and keep it updated
As the figures above suggest, a will does not guarantee that no family disputes will occur over your estate. However, it can certainly lower the odds. Moreover, the clearer the will is (and the more up-to-date it is), the less likely this will occur.
Without a will, your estate will be administered under the UK’s “intestacy rules” when you die. These may not distribute your assets in the most tax-efficient manner. Perhaps more importantly, the process is unlikely to result in what you would have wanted.
For instance, if you die and leave a surviving partner behind, they may not be entitled to anything if you were not married or in a civil partnership.
A will allows you to specify “who receives what and when” after you die. Perhaps you have multiple children who each want to claim sentimental items in your home. By assigning these items in your will, you can help avoid a nasty argument between them later.
Consider using your will to make arrangements for dependants (e.g. minor children), your funeral, and how different assets should be handled – e.g. pensions and ISAs.
To be valid, your signed will must be witnessed by two people. These cannot be beneficiaries and it is generally wise to avoid using executors as well.
#2 Have the necessary discussion
The “inheritance discussion” is one that many people dread. Yet, it is usually necessary. After all, if you do not communicate your mind to your loved ones when you are alive, how are they supposed to guess what was in it after you are gone?
This discussion requires careful thought and a sensitive approach. How you handle things will depend on your family situation and dynamics. For instance, if you have a highly “immature” adult child who may become emotional in a group family discussion, perhaps meeting each person individually might be better.
Sometimes, it can help to have a financial adviser with you during the discussion to provide expert and objective information. If emotions start to run high in the room with family members, a professional can explain different options and tax planning outcomes impartially.
Writing a “letter of wishes” alongside your will can also be useful. This document is not legally binding but can help provide context and explanation for the provisions in your will. For example, if you leave more inheritance to one child compared to others, this could be the place where this decision is elucidated.
#3 Consider power of attorney
Sometimes, family disputes arise because different individuals disagree over the “mental capacity” of the deceased. Perhaps one person argues that “Dad wasn’t in the right mind when he wrote his will”. This is where power of attorney can help.
If you do face cognitive decline in later life, power of attorney specifies a trusted person (or people) to make key decisions on your behalf – e.g. about your wealth and health.
Including a “capacity statement” in your will can help to prove that you knew what you were doing when you wrote it. This is especially vital if you have a medical condition like dementia. For extra legal protection, you may need to include a certification from a medical practitioner.
All legal documents pertaining to your estate need to be kept updated. If your goals or circumstances change, then you may need to amend your will, power of attorney, or letter of wishes. For example, a major life event such as a family estrangement or divorce can require amends. Or, perhaps your executor dies, and you need to find a replacement.
Conclusion and invitation
Increasingly, many people are taking a “DIY approach” to writing a will and other legal documents. Whilst this can save money in the short term and even be sensible for those with “simple” estates, others may be setting up their families for costly disputes later.
This is particularly due to ambiguous wording. If your will is not clear, then your loved ones might disagree later over your meaning and intentions. Consider seeking professional advice to mitigate this risk.
If you would like to discuss your financial plan and investment strategy, then we would love to hear from you. Get in touch with your Financial Planner here at Vesta Wealth in Cumbria, Teesside and across the North of England.
Reach us via:
t: 01228 210 137
e: [email protected]
This content is for information purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult your Financial Planner here at Vesta Wealth in Cumbria, Teesside and across the North of England.