Important financial issues to discuss with your family

Money is a notoriously difficult subject to discuss with family. But this is an extraordinary time, with concerns around ill-health amid an environment of rock-bottom interest rates, stock market volatility, and economic turmoil.

The current situation could provide an opportunity for openly discussing financial issues. Here, we consider some potential topics.

1. Your estate

Inheritance is a hugely emotive subject. Yet while it may seem morbid to discuss who may inherit a portion of your estate after you have passed away, doing so could prevent future difficulties or disagreements. You can explain what your plans are and why you have made decisions.

This may also provide an opportunity to consider if your will needs updating, or any changes you want to make. Even if you already have a will you might need to amend this – for example, to benefit from the residence nil-rate band, introduced in April 2017. This rose to £175,000 per person in April 2020.

2. Lifetime gifting

While you want to avoid giving money away that you might need in the future – towards care costs, for example – you might want to consider passing on some wealth to future generations.
There are various ways you can do this by making use of pensions, trusts and life assurance. If you encounter difficulties, a financial planner can work with you to give you peace of mind that you’ve laid the firmest foundation for your family’s future.

You can also gift tax-efficiently during your lifetime using various allowances. Examples include:

  • You can give away up to £3,000 per year free from IHT;
  • You can also make any number of small gifts up to £250 to as many people as you like each year;
  • You may make further tax-free gifts such as potentially exempt transfers (PETs).

3. Power of attorney

Dealing with a deterioration in mental capacity can be particularly tough on your family. If you are no longer capable of making decisions for yourself, you want to ensure someone you trust is legally in this position.

You can put in place a power of attorney, which is a legal document enabling you to name one or more people to look after your affairs if you lose capacity.

Without this document, an application must be made to the Court of Protection, (the sheriff court in Scotland), and this can be a complex, costly and lengthy process for your loved ones.

4. Complete a financial fact sheet

Discuss where you will safely leave basic details of your bank accounts, savings, investment and utility providers. Compiling a list of these is time well spent. This could be invaluable to your family in the event you lose capacity or pass away.

If you would like to find out more about what you need to do, please speak to your financial adviser.

Reproduced with permission of Brewin Dolphin

The value of investments and any income from them can fall and you may get back less than you invested. Opinions expressed in this document are not necessarily the views held throughout Brewin Dolphin Ltd.
Please note that the information in this article is for information purposes only and does not constitute advice. While we believe it to be correct at the time of writing, Brewin Dolphin is not a tax adviser and tax law is subject to frequent change.
Tax treatment depends on your individual circumstances; therefore, you should not rely on this
information without seeking professional advice from a qualified tax adviser.