09/05/12

Why inheritance planning matters

Money Inheritance planning and passing on wealth can be a thorny subject for many families, and family-run businesses in particular.

Succession planning is one area of modern financial transactions that is often opaque, with many people reluctant to talk openly about the details of what they will leave behind when they are gone.

Although being able to provide for the financial needs of surviving relatives is a special kind of gift, it can also be extremely challenging, not just because of the technical complexity of making appropriate arrangements, but also because of the hard choices about how to divide wealth.

Our Wealth Advisory team - which explains and advises around the various inheritance options - has seen among our clients that there are many factors that individuals take into account when considering succession planning. 　

These include family expectations, the sacrifices and contributions that family members have made, and even with whom they have had better relationships.

We also find that there is a degree of anxiety among wealthy individuals in passing on their wealth - despite the age-old adage of "you can't take it with you".

Research published last year by the wealth and investment management division of Barclays found that when it comes to succession planning 40 per cent of the UK's high net worth individuals do not trust their children and stepchildren to protect their inheritance.

Surprisingly, those in the South East are even less likely to trust their children and stepchildren, even more so than those in London.

43% of South East respondents confirm this lack of trust, compared to 35% of London respondents. This shows that wealthy individuals in this region might benefit from careful advice around inheritance planning.

Experts have partly attributed this lack of trust in the future generation to the changing structure of many UK families.

As second and third marriages become more common, this can lead to more complex relationships with both children and stepchildren in relation to wealth and inheritance planning, which further underlines the importance of seeking advice in these matters.

With wealth comes an increasing complexity of choice, and this can result in concerns about trust.

Through working closely with our clients' professional advisers, we stress that understanding in advance the options for succession planning, and seeking advice from solicitors and accountants, as well as wealth advisers, can help address these fears and provide confidence that your wealth will be wisely managed in the future.