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Partner Content by Octopus Investments

Why you should make estate planning your focus for 2021

Now is a great time to engage clients on the subject of estate planning.

Estate planning is one of the biggest financial advice opportunities of the next decade. It presents the potential of significant new business with existing and new clients.

If there’s one time of year that’s a natural trigger for discussions around inheritance, it’s Christmas. After a challenging 2020, there’s good reason to believe leaving a legacy has never been closer to the front of so many clients’ minds.

That’s why we’re hearing things like sky-rocketing enquiries for wills. According to deVere Group, these have increased by 76% since the start of the coronavirus outbreak.

As an adviser, how can you support your clients in discussions about their estate? How can you spot opportunities? And what solutions might you need at your disposal?

Unlocking the opportunity

Trillions of assets are set to pass down the generations over the next decade.1 However, with the amount that can be passed on free from inheritance tax (the nil-rate band) frozen at £325,000, more people than ever are set to face a potentially significant bill. 

There is therefore large accumulated wealth and a huge need for advice. But starting the discussion is often the first hurdle in making the most of the opportunities.

This was one key issue addressed by Joe Sanders, Chartered Financial Planner at Informed Financial Planning, when he featured on a recent tax planning event hosted by Octopus.

“An honest conversation with the client can help,” says Joe. “Ask ‘what does your legacy mean to you’ and ‘who is it going to be passed down to’ and make it positive.

“Outline what their current liability against inheritance tax is and explain, in the future, with investment growth and income, how big that problem could get. If they can understand that, it is for them to understand the importance.”

Fear of lockdown

Once a client realises the extent of their potential liability and wants to do something about it, they may still object to inheritance tax planning. 

Some don’t want to give up wealth in their lifetime, while others feel they’ve left it too late to do any planning at all. The biggest concern when it comes to estate planning is the fear of locking away money when it might still be needed.

Nine out of ten advisers (89%) surveyed in our research said their clients have become more mindful, compared to five years ago, of potentially needing access to money as they grow older.2

It’s an understandable concern. None of us know if health is going to become an issue for us. Sanders explains: “Some clients don’t feel confident they have enough to be comfortable in the type of care they want in later life. That fear of loss of control and access is a huge thing.”