STEP REPORT: How Out of Date is Your Estate Planning

Or how to cost your family £140,000 plus. Not that the STEP Report specifically mentions that tens of thousands of pre April 2017 IHT Planning Wills in the UK now have the opposite effect!

Estate Planning in 2022

We have always believed that Estate Planning is an ongoing journey, not a one-time fix as most people seem to believe. Tax, the Law, and “family” circumstances are constantly changing and evolving.   Effective Inheritance Tax planning was, once again, turned on its head by the introduction of the Residential Property Nil Rate Band on 6th April 2017 and tens of thousands of IHT Planning Wills suddenly became disastrous (we can check yours and possibly save your family £140,000!)

Transgender issues can be disastrous if planning is not kept under review as in some jurisdictions, a person who changes sex is currently no longer the same legal person in Estate Planning terms.

A recent STEP Report highlights the increasingly complex issues facing families in East Sussex and around the world, with the growth of “new” types of family units:

  • Traditional family: a married heterosexual couple with biological child/children.
  • Same-sex families, married, civil registered or not.
  • Blended family: Family unit where one or both parents have children from a previous relationship and they have combined to form a new family. •
  • Cohabiting families: A family unit where the parents live together without being legally married or in a civil partnership.
  • Multi-jurisdictional families: A family unit that is spread out globally, residing and holding assets in different jurisdictions.
  • Multi-ethnicity families: A family unit that combines different ethnicities and cultures.

Go back 25 years and the work of the Estate Planner was relatively simple – often just everything to each other, then to the children on the death of the surviving parent.   While this model still applies to a large extent, external threats to finances and the increasing risk of divorcing children plus the difficulty of balancing the rights, wishes and moral obligations to potential beneficiaries are greatly increased.

As Estate Planners, we often find that our role is far from being purely legal: there is often a strong element of counselling, to ensure the client considers all the reasonable and sometimes unreasonable demands on their finances and affections. How will a particular course of action affect potential beneficiaries individually? What about Inheritance Tax, now and for future generations?

As we said above, Estate Planning is an ongoing process, and our Peace of Mind Service makes it easy for your planning to remain current, and for your documents to be secure.

But back to the STEP   Report which triggered this article and conflict: with families no longer always being biologically related (and that includes adopted children of course) balancing both the needs and desires of all parts of the family can be a nightmare.   Indeed, the remarriage of one partner after death or divorce often results in the unplanned complete disinheritance of the children of the previous family, with everything eventually passing to the children of the new partner who had no part in the original family. Tough balancing act, easily resolved but usually just ignored.

For us, as Estate Planners, these are some of the issues (the percentage increase are those which the STEP Report records as already occurring):

  1. 70% increase in complexity of family dynamics.
  2. 49.26% increase in flexibility of planning.
  3. 35.16% increase in complexity of planning documents.
  4. 22.95% increase in the likelihood of court disputes.
  5. 22.53% increase in family breakdowns (more if you count children distancing themselves.)
  6. 21.95% need for flexibility in Estate Planning.
  7. 14.95% need for the use of Protectors/ Guardians to independently ensure planning remains fair.

There was a great deal more in the Report which I intend to write further articles on time allowing – but you can always download your own copy!

Why not contact us for a Review?