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Inheritance - Great Expectations

by Para planner on 10·01·2017

Are you expecting an inheritance?  I often see this question on fact finds completed by advisers, and the answer is commonly yes, sometimes there is even a £ amount expressed.  With an increasing imbalance in assets between baby boomers and the generations which followed, more and more people are relying on the generosity of parents and grandparents to help buy a first home, pay off debts, or even to help cover regular living costs.  These gifts are no doubt gratefully received, but they are not obligatory and I would like to think most children would not have any expectation of such handouts; why then when their grand/parents die, would they feel an entitlement to a cash gift of some sort?

As advisers we have some part to play in helping to educate our clients in financial matters, both in relation to any savings or investments we source for them, but also in other aspects of their financial planning e.g. paying down debt, helping with long term budgeting and maintaining cash emergency funds.  Of course, they may not take heed of any advice we have to offer in areas where we have no direct control, but we would be neglectful if we did not look at a client's overall financial health.  With this in mind, when I see a client expressing an expectation of an inheritance, and more worryingly, planning to use said lump sum to pay off a mortgage or help to fund their retirement, I wonder if the adviser has stopped and pointed out to them that this 'money' is not a certainty and should not be relied upon?

Even if a grand/parent has made a Will in the client's favour, these things can change, with a Will being amended or even contested by other potential beneficiaries.   A more likely scenario given our aging population and the long term care crisis, is that there will be no funds left to give in a Will.

The flip side of this discussion is ensuring that clients have made a Will, and that this is kept up to date.  Clients may be cagey about letting you know the provisions of their Will, but it is useful as an adviser to be aware of their wishes, so that any planning does not clash with the points of the Will or any IHT planning therein.  Even better, is for a client to allow you to work alongside their solicitor to help ensure their estate is distributed as they would expect.

Wills can of course be contested, and a rising number of cases are being seen in the courts. I am sure many of you are aware of the recent case of a woman who won a share of her estranged mother's estate, even though her mother had expressly left it all to animal charities.  There are a number of reasons a Will can be contested, many of which deal with the deceased's ability to have made the Will, or it's actual validity.  One lesser known reason is for 'reasonable financial provision' (under the Family & Dependants Act 1975).  In the majority of cases an able bodied adult with the ability to work and earn a living would have little chance of success in making a claim, but, where the deceased had been making a regular gift of monies to a child in order to support their standard of living, this would be taken into account when the Court made its decision.  The legislation is clearly more complex than this, but advisers and their clients should be aware of this when helping their grand/children, and when drawing up a Will.

Of course, all of this depends upon how much you like your family.  Making a Will should be done with the necessary legal oversight, but it could be a good opportunity to set the cat amongst the pigeons, or at the very least have the last laugh.  I have seen many Wills over the last 12 years but the best included one last provision, which was something along the following lines 'And lastly I leave my ex-husband Bob the sum of 1 pence, which is a penny more than he was ever worth', ouch!

My conclusion having considered all of this, is that no one should expect anything on the death of a family member, and for those leaving an estate, it is all much simpler if you just spend it all - far less admin all round.