Family estate planning – talking about estate planning with your parents

Talking with your parents about estate planning will always be a difficult conversation. Discussing incapacity and the end-of-life are just not topics society is comfortable with. Often, we and they don’t want to think that they may experience a decline in health which limits their ability to manage their own affairs or even consider that one day they will no longer be here.

However, with the government revealing there was a 14% rise in the amount of Inheritance Tax they have received in 2021/22 compared to 2020/21* there has never been a more prominent time to have those difficult conversations.

A good place to start is to ask your parents if they have drawn up any paperwork, such as a Will or Power of Attorney, so that you and they are prepared in the event of incapacity or end-of-life.

Having a Will in place is a keyway to protect your family’s wealth and ensure that your estate is passed onto the next generation in the most tax efficient way, hopefully saving on inheritance tax. Perhaps more importantly it leaves your loved ones with the tools they need to administer your estate in the best way possible and what is undoubtedly a difficult and emotional time.

As part of the Will process an Inheritance Tax plan can be put in place which will often include lifetime planning such as gifting and the consideration of Trusts which can reduce the estate value. Those plans will also aim to ensure your parents are making or do make full use of the available exemptions and reliefs for Inheritance Tax.

Estate planning is an important process that will help protect your parents, their assets and you. However, it is not always just about money and inheritance. Discussing personal welfare and healthcare is equally as important.

If your parents don’t have Lasting Powers of Attorney in place and become incapacitated in later life it may be you who suffers. Without Powers of Attorney children often have to negotiate the stressful, time consuming and expensive route of the Court of Protection to get permission to look after their parents’ health and financial affairs.

Simply put a Lasting Power of Attorney for Property and Financial affairs will enable your parents to appoint those they trust to take charge of their finances and other assets if they were to ever lose mental capacity. There is also an important option to allow those trusted people to assist them with their financial affairs even when they still have mental capacity with their permission. This is often a key tool when a parent is still mentally able but perhaps failing physically.

A Lasting Power of Attorney for Health and Welfare will enable a trusted person to make healthcare decisions when or if mental capacity is lost.

Whilst talking about estate planning with your parents will often be difficult and challenging, it is important that you and your family members have these open and honest conversations. These conversations should also be revisited frequently to ensure everyone is prepared for the future of those involved.

If you are concerned that estate planning conversations may be too difficult then you may like to consider working with a third party. This can help facilitate these conversations and ensure important topics and considerations are discussed.

*Inheritance Tax statistics: commentary – GOV.UK (www.gov.uk)

If you are interested in receiving further details on any of the topics discussed or if you have any specific questions, please contact us.