While IHT is unavoidable, there are certainly ways in which an individual can be more tactile about their asset management.
For example, any gift an individual allocates to an individual, in a valid will, seven or more years before their death is exempt from IHT.
Although, this must be demonstrated as an outright gift, being referred to as a “gift with reservation of benefit” to account for this. This gift could apply to a range of assets, from a fixed sum of money to property or shares.
Trusts are another useful tool for individuals to create a more tax-effective will. These allow people to set money aside to support a beneficiary outside of their estate (for example, to contribute towards university fees), meaning that they are exempt from IHT.
Evidently, there are plenty of financial, as well as emotional benefits for individuals to get to grips with writing a well. The key, however, will be for industry leaders and advisers to effectively communicate this to clients.
Changing behaviours
As is the case with any behavioural change, it will take a collective effort from various stakeholders to ensure that clients are all aware of the benefits of having a valid will in place.
Firstly, various bodies, such as The Society of Will Writers, Solicitors Regulation Authority, the legal Ombudsman and the Legal Services Board should commit to improving consumer access to will-related information – namely, what individuals stand to gain from having one, and the potential complications that might arise due to intestacy rules.
Likewise, these bodies should also ensure that individuals understand where they can go to receive help or guidance when it comes to creating their will.
That said, some onus should also be placed on the financial services sector to encourage clients to manage their estate more effectively.
For example, regulatory bodies should be more proactive in promoting a will as a tax-effective method of managing their assets and investments once the individual in question has died.
Likewise, independent financial advisers should look to incorporate estate management into their tailored financial advice to clients, where appropriate.
This could be as simple as asking a client if they already had, or were considering creating a will, and whether they require any assistance.
Doing so would be a positive step to gently plant the seed that clients should begin thinking about creating a will, as a valid part of their personal finance management.
In addition to industry encouragement, the process of writing a will must be made as simple as possible for clients.
Similar to many aspects of personal financial management, many consumers are likely to be put off engaging with their will because they fear the process is too complicated.
