Insight into your legacy

So we are now officially over summer and into Autumn despite the rather nice temperatures in the last few weeks.  I know I have enjoyed the summer and have had a couple of very nice breaks spending time with my family.   Getting such time, however, did get me thinking of what would happen if I was not around.  Indeed as I am so keen to ensure that I continue to be around I was prompted to have a full medical!  So there is now definitive proof that I am alive with an excellent chance to make it through the week too!  But the medical did show up that I need to lose weight.  This will, of course, come as no surprise to anyone who knows me and certainly came as no surprise to me!

Now I suspect the subject of my future has been on my mind for a few months due to a couple of incidents that happened earlier this year.  Firstly a good friend of mine sadly passed away in April. He was just 56 years old and in the prime of life, in training for another marathon (he’d run lots) and to climb yet another mountain to raise money for the British Heart Foundation.  He was the MD of a very successful business with lots of opportunities ahead and left behind a wife and two daughters.   I will miss him.

At least in this case he had a will and life insurance in place for his family, although he had not updated things in quite a few years.  However it was naturally a very traumatic time for the family and despite the best of intentions there was still so much to sort out.  Whilst lots of things were in place it was a real effort to try and track down everything with several old pensions, some life insurance, even things like who mortgages were with.   If only there had been one place where everything was written down.

Also this year I also had occasion to talk to a client who suffered from what is called Sideways Disinheritance.  Having children myself this is an issue that many parents fear.  The names in the following are made up, the facts however are as described to me.  My client Edward’s father had run a successful business and had built up a substantial portfolio of properties and investments.  In addition upon his death at 49 years of age it turned out he had taken out a hefty life insurance policy too.  As is common he left everything to his, Lilian.  Lilian was naturally distraught and it took her a long time before she regained any semblance of normality.  But time heals all as they say and after a few years she started going on trips with a club she had joined.  There she met a man called Fred who had a child, Jane, from a previous marriage.

Fred was a man of independent means too and certainly didn’t need or want Lilian’s income.  A couple of years after meeting they got married.  Edward was very happy for his mother.  At the wedding Edward and his brother were there as was Jane – the one and only time they all met in fact.  Edward and his brother were a few years older than Jane who still lived with her mother several hundred miles away.   Fred and Lilian were very happy and at some stage both had a will drawn up leaving everything to each other on the understanding that the surviving spouse would ensure that the other persons children would inherit their fair share.  Sadly Fred contracted cancer.  He was very brave about it and very pragmatic.  With Lilian’s knowledge he drew up a new will leaving much of his wealth to his daughter.  Sadly he did not get to see her very often due to the distance and the fact that he and his former wife no longer talked.  But he loved Jane of course. As his cancer spread he was advised that he likely had less than a year to live.

During the time of Fred’s cancer Lilian had been a rock.  She had looked after him made sure he attended his appointments on time and continued to eat.  She had booked trips out, ensured everything around the house was taken care off and generally did everything to make Fred’s last few months as happy as possible.  One evening when she was sitting with Fred watching one of their favourite programmes she suffered a massive heart attack.  Fred called the ambulance but Lilian died before they got there. Sadly less than a month later Fred too passed away.  No one really considered the financials at first, there was so much to do with organising the funerals.  Edward organised both, including trying to find all the information that the solicitors required.  The problem however, was that Lilian having unexpectedly died before Fred had left everything to him.  Then on Fred’s death everything went to Jane.  Edward and his brother received nothing. 

This may seem a farfetched tale but sadly the problem of sideways disinheritance is much more common that you probably think.  Each year it affects thousands of families.  There are ways to protect against this though and it is called Legacy Planning.  It is a way for protecting your wealth for future generations so that your loved ones’ inheritance is protected. Now of course everyone’s personal and family circumstances are different and legacy planning is not required for everyone.  But a will on the other hand almost certainly is.  If someone dies without a will the assets are often not distributed the way you think.  A common misconception is that it will all go to the spouse.  Actually the first £250,000 goes to the spouse and half of the remaining estate with the other half being split between any children.  This is often not a sensible split.  If the children are young their share will be put into trust until they turn 18.  I am not sure that if I had inherited a large sum when I was 18 that I would have spent it in the best manner possible for my future! 

At this point I have to hold my hands up and say that I, like many others, have been meaning to get around to sorting my will out and looking at my life cover and so on for a long time.  But there is always so much other stuff to do and it kept getting put back.  Besides I reasoned, I still had years to worry about such things. Hopefully we do all still have years before out time is up, but as with the people above, sometimes we don’t get as long as we wish.  So with this in mind over the last 6 weeks I have sat down and made some ‘New Year’ resolutions.  It’s just that I decided to start them in August and September!   And so that I follow through with them I am going to share them with everyone here so that you can all hold me to account!  My list of things that needed to be done was as follows:

  1. Make my plan for losing weight and becoming healthier – my plan of living forever may not work out but I want to give myself the best chance possible.  But so far my plan is working!
  2. Sort out and write down all the important information so that my wife doesn’t have to do any detective work if I have an untimely death!
  3. Sort out my life insurance to an appropriate amount given my current circumstances
  4. Draw up wills for both myself and my wife
  5. Consider legacy planning

The diet started three weeks ago and I have been going to the gym and am tracking my progress with realistic goals.  Basically this is the same process that I would advocate for running your business with our Insight with the Numbers programme, just tailored to monitoring me!  In case you’re interested I can let you know that so far I have lost over half a stone, but there is a lot still to go and at the start it is always easy.  The next bit is to stick with it and keep going to get down to a much healthier weight, without becoming too obsessed.  I still want to have a life… and the occasional pizza!

The rest of my goals are obviously more relevant to everyone else!  They have taken quite a lot of time and effort to run through and consider all the ramifications, although I am delighted to say that we are nearly finished.  However whilst going through the process we realised just how much is involved.  As such it was decided that offering to help others streamline this process might be of help to some.  So Insight is introducing a new service called ‘Insight into your Legacy’.  There are several parts to it which can all be used individually or together as appropriate. 

  1. Most importantly and fundamentally we have developed an Insight Survivors Information Pack (ISIP).  Had my friend had this in place it then upon his death things would have been a lot easier and less stressful for his family.  The ISIP will collate and store all the information both electronically and in hard copy.  We will also update this each year to allow for any changes.  Then in the event of your death your spouse or loved one(s) simply need to contact us to obtain all the details that they and the executors would need.  I cannot stress enough just how much of an administrative headache this can be at a most stressful time if it has not been done before. 
  2. If you do not have a will or legacy planning in place we have trained Barrister Intermediaries on our team who can take instruction and put the necessary documents in place to ensure your wishes are met.  This is also really fundamentally important to get something in place. 
  3. We can look at your wealth and advise if there is anything you need to do to plan for the dreaded Inheritance Tax (IHT) and where appropriate introduce you to specialist IHT planners.  We can also look at planning for care home fees should such care be required when older.  We can also look at this for your parents so that their estate does not lose 40% due to IHT.
  4. Should you require to have life insurance reviewed or put into place we can introduce you to a trusted Independent Financial Advisor should you not have your own to ensure that you are covered.  They can also review your pensions to see what benefits on death there are and indeed if the pensions are suitable for you or if there are better pension offers around.
  5. As a final point we can, if you wish,  be appointed your executors upon your death and take care of the whole administration of your estate leaving your loved ones safe in the knowledge that the people looking after them are the same that looked after you when you were alive.

No one really wants to think about their death.  But rather than leave everything to chance I urge and implore you to put things into place now so that if the unexpected does happen at least you have left your loved ones in the best position they can be in.  To make it easy here is a list the checklist of things to consider – steps 1 and 2 however should not be considered optional!

  1. Write down all the relevant information that your spouse or loved ones would need to know.  Include policy numbers where appropriate.  Let the important people in your life know where they can find this information. 
  2. Get a will.  If you have one already then check it is still appropriate
  3. Consider whether legacy planning is suitable for your family
  4. Consider if you should get life insurance so that your family will cope financially if you are not around.
  5. Consider your IHT position and ensure you understand just how much you might be giving to the tax man.

If you would like help with any of this, or just a general chat about the Insight into your Legacy service then please contact us by emailing with the word ‘Legacy’ in the title and a brief description of what you are interested in.  We can then arrange for someone to phone to discuss how we can help.  The most important thing however is to ensure that you do take action.  It’s not the most pleasant thing to think about but it is so important. 

Next time I’ll be returning to business related matters but until then keep safe and healthy!