You’ve spent a lifetime accruing wealth for the benefit of your loved ones. So, the last thing you want to happen after you pass away is for your family to get into disputes about who’s entitled to what and how much.
Sadly, this is an increasing issue for many families. Research reported in Today’s Wills and Probate reveals that almost half of UK adults are uncertain if their families could amicably split an inheritance in the absence of a will.
Moreover, according to the Guardian, as many as 10,000 people in England and Wales are disputing wills every year. In 2021/22, there were 195 disputes in front of judges, up from 145 in 2017. This rising figure is due to a number of factors, including:
- Increases in divorce and second marriages
- Changes to family dynamics, such as stepchildren
- Rising dementia rates leading to claims that wills were not initially properly drawn up.
All this emphasises the importance of having an estate plan in place, helping to avoid the possibility of family disputes during an already difficult time.
While writing a will is often a sensible place to start, comprehensive estate planning goes beyond this, making sure that a will is above contest and that your express and explicit wishes are carried out.
Here, you can read about five steps you can take when creating your estate plan to reduce the risk of family disputes.
1. Talk openly to your loved ones about your wishes
Discussing what will happen after your passing might not always be the easiest topic. But, having a frank conversation upfront can leave your loved ones with a complete understanding of how you’ll be leaving your estate.
It can be sensible to choose a time when you’re not likely to be interrupted, and ask everyone to be fully present (no phones!). If you have a spouse or partner, it’s a good idea to speak with them before you both talk to your wider family.
Then, take the opportunity to explain any bequeathments, lifetime gifts and, expressly, how assets including your property will be divided after your passing.
Try to pre-empt any questions or objections so you can offer calm, rational answers.
2. Write a letter of wishes
While it isn’t legally binding, a letter of wishes is a good way to clearly detail how you would like your estate to be divided. This letter is an opportunity for you to express your exact intentions in writing. It’s a confidential document that can’t be made public, so will only ever be seen by your executors, trustees, and family.
If you’ve chosen to have a conversation with your family upfront, this letter can cement this discussion, leaving no room for misinterpretation or dispute. It’s also a good way to give further guidance to the executors you’ve appointed to administer your estate.
3. Make your will a “live” document
Your will is the cornerstone of your estate plan. If you’ve already made a will, that’s definitely a good start. However, circumstances change and your will could quickly become out of date.
For example, you may have got divorced, sold your house, or bought another property. Births and deaths may also impact on your will. Plus, when you get married, this automatically invalidates your existing will.
It’s prudent to review it regularly and ensure it still reflects your wishes and your family dynamic.
4. Consider giving gifts during your lifetime
Making gifts during your lifetime can help to avoid family disputes as you can ensure you divide your wealth fairly, and have the opportunity to explain any decisions that your family may otherwise question. An added bonus for them is that it can also be an effective way to reduce the amount of Inheritance Tax (IHT) on your estate.
This is especially key given that, from April 2027, unused pension funds and death benefits will be included in your estate for IHT purposes (consultation findings to be published later this year).
This approach also means that you’ll be able to see your beneficiaries enjoy your gift while you’re still alive.
Remember that while you may want to help your loved ones, you still need to protect your own financial needs so you don’t leave yourself with a shortfall. This is where your financial planner can help, accurately calculating how much you can afford to give and the potential IHT benefits, while maintaining your lifestyle.
5. Think about the practicalities
There are many small but potentially impactful practical choices you can make now to help avoid familial rifts when you pass away.
For example, choosing the right executors to administer your estate can help to avoid disputes and ensure a smooth transition. Executors can either be family members or legal professionals – you’ll need to get their permission first and it’s a good idea to let other family members know who your executors are.
You may also want to consider where to keep your will. The original is the only legal document, so it’s not recommended to keep it at home, in case of fire or theft. Your solicitor or will writer could store it for you, or you could keep it at a secure storage facility.
Finally, make sure your family has any important contact details that could smooth the process of managing your affairs, such as your financial planner and your solicitor.
Get in touch
Thinking about life after your death is never easy and it could be tempting to believe your family would never fall prey to any disputes.
But, emotions can run high after a bereavement. So, setting out your wishes clearly and precisely is a sensible precaution – it doesn’t take long, and it can make things much easier for your family after your passing.
Working with a financial planner can also help you make the right decisions for both you and your family over the long term.
If you’d like help with financial planning for the future, please get in touch.
Email hello@intelligentpensions.com or call 0800 077 8807.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
The Financial Conduct Authority does not regulate estate planning, tax planning, or will writing.