RegulationJun 3 2016

Advisers need to be involved in clients’ will making

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Advisers need to be involved in clients’ will making

The increasing likelihood of a person’s estate being subject to inheritance tax means advisers and their clients’ family members will have to be more involved in the will-writing process, according to Rachael Griffin.

Old Mutual Wealth’s financial planning specialist said inheritance tax is becoming more important to more and more people’s financial affairs. “When people are making financial planning decisions, IHT needs to be taken into account and they need to be understood by the will-writer.

“With pension freedoms people may be releasing more equity from their pension and have more inheritance-taxable cash available.

“From the adviser’s perspective, they should be talking to their clients about their will and it is about making sure their clients understand the products and recommendations they are making and their ramifications.”

She said it could also be worthwhile involving the beneficiaries of the will, so they understand what they are receiving and how they are receiving it.

The Office for Budget Responsibility has forecast the number of estates subject to inheritance tax will more than double in the period between 2013/14 and 2018/19, reaching 54,500 – or 10 per cent of deaths.

In October, the latest publicly available data on tax receipts showed for 2012/13 inheritance tax paid on 17,900 estates cost families £3.05bn – a 15 per cent increase on the £2.65bn total paid in the previous tax year.

Last month, an adviser won a court battle against the beneficiaries of a client’s will after they claimed they did not receive the full inheritance their great aunt intended for them because of confusion between the lawyer drafting the will and the adviser.

Ms Griffin pointed to figures released by Citizens Advice which showed increasing interest in wills among the public.

There has been a sharp rise in enquiries to Citizens Advice about will-making and intestacy, with 3,167 people contacting the charity in 2015/16 about making a will compared to 1,933 in 2011/13.

Katherine Barry, advice manager at Citizens Advice, said: “Making a will ensures that your wishes are taken into account when money and cherished possessions are passed on.

“When someone who passes away has a will this can also make it easier for family and friends to manage their affairs,” she added.