If there is one topic that none of us want to talk about, it is our own mortality.
When people are fit and well, the risk of dying feels distant and remote. When people are unwell, many feel it is defeatist to plan for the worst. Some superstitious people believe that if they put their affairs in order, they might get the tap on the shoulder, as if there is an orderly queue with priority places for those well prepared! If I had a £1 for everyone falling into the superstitious category, my wealth planning needs would keep several financial advisers busy.
Despite the fact that everyone would naturally like to minimise the stress and administrative burden for their loved ones when they die, few are aware of the steps they need to take to prevent this. Most adults need a plan in place for later life and death, but a lack of knowledge of the implications of not having a will or Lasting Power of Attorney (LPA) results in low levels of engagement.
Co-op research shows that three-quarters of UK adults still haven’t had conversations with loved ones about their wishes. Highlighting the impact that not having these conversations can have, almost a quarter of UK adults have taken on the role of executor and, of those who have, over a quarter found the role stressful and 15% found the experience upsetting.
This is largely because people do not understand what would happen to an estate on incapacity or death. For example, many assume that a next of kin would be able to act on their behalf, when really, they need to put an LPA in place. Similarly, many assume that their partner will automatically inherit their estate, when in fact they need a Will in place.
These are some of the many misconceptions about how the law works which means people take unnecessary risks often leading to unintended financial consequences. Financial advisers have an important role to play here – firstly to bring the topic forward as part of their regular dialogue with clients, to reassure them and metaphorically hold their hand as they navigate the estate planning process.
With the help of informed advisers, people can better understand how the law works and how they should use it to better protect their family and assets.
Why a will is not enough
In recent research undertaken by Co-op Legal Services, 75% of IFAs responded that better estate planning support would improve client satisfaction, retention and referrals. However, currently, only 10% of clients work with their IFA on their will.
Many clients assume that a Will is enough. However, 70% of the UK adult population do not have a Will, and the 30% that do think they have done all they need to do to plan for the future. By its very nature, a Will only takes effect on death – so offers no protection during a lifetime.
It is crucial that IFAs support their clients to understand that later life planning is about much more than just Will-writing. There are three fundamental requirements: a Lasting Power of Attorney, a Will and an estate health check. Often, only direct experience of a family member not having a Will or LPA highlights the real angst and stress of being without one. These are important issues, which most people may not fully understand, and talking about them needs to be normalised to ensure peace of mind and protection for families.
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