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Partner Content by Octopus Investments

Using “the family approach” to encourage timely estate planning

An unprecedented number of clients have delayed financial decisions because of the pandemic. But an indirect approach can help turn hesitation into urgency.

Let’s consider a scenario.

Catherine and Linda live on the same street, a few houses apart. Both are widowed and inherited large estates. They’re at a point in their lives where they need to think about the impact of inheritance tax.

About twelve months ago, Catherine had her annual review with her financial adviser. It was a little different, taking place over the phone because of lockdown restrictions. So her adviser made sure to take some time checking in on how she and her family were. 

Later in the call, he raises the topic of inheritance tax.

Catherine says she is keen to go through her options. But she stresses that now is not the time. She’d prefer to wait until things return to normal to make any firm decisions. So that’s how things were left. 

Linda’s review was also a simple phone call. But when her adviser raised the topic of inheritance, things moved relatively smoothly. And after three or four further discussions, Linda had begun to put planning in place.

What motivated Linda to prioritise her estate planning? And how can advisers help a client see estate planning as a priority?

The risk of delay

A survey commissioned by Octopus earlier this year found that 61% of advisers have clients who’ve delayed financial decisions because of the pandemic.

In some cases, that’s involved clients putting off their estate planning. 

This is troubling. The earlier a client starts their estate planning, the better their position will be further down the line.

You only need to look at the amount of tax raised from failed gifts to see how costly delays can be. The most recent data available shows £197 million was raised from failed lifetime gifts in the 2017/18 tax year alone.

But your client won’t necessarily appreciate the urgency of estate planning. And that’s where a more indirect approach to the estate planning conversation can make all the difference.

Make the conversation about loved ones

A client can need help to see inheritance tax planning as a priority. Otherwise, it becomes easier for them to delay their planning.

Ideally, a client would see inheritance tax planning as an extension of making a will. It’s about maximising outcomes for loved ones. It’s about achieving the best results for the people that matter to a client. 

You might begin the estate planning conversation by focusing on what the client wants for their family and their family’s future. Why is that important to the client? Eventually – how might inheritance tax impact those goals?

Involving the family is a good idea whether in a pandemic or not. That said, it has been especially important over the past year.

Bringing beneficiaries into discussions can help where there are concerns about vulnerability. And it’s often the younger sons and daughters that are most comfortable with video calls and remote meetings. So involving the client’s family has helped many advisers move estate planning conversations forward.