Latest / Howes Percival Podcast / Estate Planning Myths: Why everyone needs a will
Transcript
- Naomi Rendell: and to the Percival podcast. I'm Naomi Rendell. I'm the Brand Engagement manager here at Howes Percival ⁓ And I'm here today with Rosak, who is an Associate in our Private Client team. ⁓ In today's episode, we're talking estate planning and some of the common myths that can be associated with it. ⁓ It's often seen as being for the very wealthy. when people hear estate planning, they might think of stately homes or very large inheritances. So today we're going to tackle some of the biggest myths around estate planning and wills and talk about why planning for the future might matter more than you think. So Chelsea, before we get into the myths, from your experience, what do people usually assume about estate planning? Chels: I think the biggest one is what you said Naomi, so people think estate planning means super rich stately homes when actually it doesn't. Everyone has an estate whether they realise it or not and estate planning isn't just reserved for the rich, it's also not reserved for the elderly I think there's a misconception that if you're young you don't need to think about this now so I think they're probably the most common misconceptions I come across. Naomi Rendell: I think that is really interesting because I'm sure a lot of people wouldn't consider themselves as having an estate as such. And so how do you define what an estate is? Chels: An estate, put most simply, is everything you own and also extends to what you're responsible for. So if you have young children, for example, they're part of your estate, we want to make sure that they're protected and we leave provisions for them. So your estate, it could be your savings, it could be your home, it's anything really. Naomi Rendell: Alright, so you mentioned estate planning is really for everyone, not just the very wealthy. What about young people? think a lot of young people would say, you know, I haven't quite settled down in life yet, I'm too young to be thinking about this, I'll sort it all out later. Is estate planning something that they should be starting to think about now? Chels: Yeah, definitely. I would encourage all young people to really think about estate planning because if you come and start the conversations early, not only are they easier to have because you're used to them by the time that you're a little bit older, but there's more opportunities available for young people with estate planning. So as your situation develops, if there came a situation where you had an influx of cash, you'd brought a property, then we might need to advise you about... how to own that property with a partner, for example, that you're not married to, there might become concerns of paying inheritance tax when you're gone. So we might be able to offer and on different trust structures. ⁓ So it's really important young people do come and speak to us because the opportunities are there ⁓ and these conversations early. ⁓ It makes the process much easier. Naomi Rendell: ⁓ about people who have ⁓ young child or very young children? You is there any point in them planning now when their children won't inherit hopefully for ⁓ many to come? Chels: Definitely, parents should definitely be considering at least on a basic level having a will in place and ⁓ reason for this is to consider guardianship. While we hope that we'll be here to care for our children ourselves for years to come and hopefully until our children are ⁓ adults, ⁓ isn't always the case. Life is unpredictable so come and speak to us. ⁓ can make sure there's a guardianship clause in your will to make sure if you're not there and your partner, if that's your family situation, can't take care of your children. You've got your say about who should look after your children rather than leaving it up to chance or for the courts to get involved. And also, you don't have to have a will where we say your child, as soon as they turn 18, inherit everything you own. Often that's not recommended or appropriate So we can put conditions in place. That might be that your child inherits at a certain age, or it might be that there's a large amount of money due to this child and we want it to be managed by trustees for a longer term. So we put the money on trust. and you do a detailed letter of wishes of how you'd want this money to be spent, we can discuss things like education. It's really about having your voice heard, we document it clearly, so if you're no longer here to look after your child, we leave provision for someone who is able to look after them and we can detail how this money should be spent. So it's something that is essential for parents, I would say. Naomi Rendell: Hmm, I think, yeah, it is something that would definitely a lot of parents ⁓ better at night if they ⁓ that their children are taken care of. ⁓ the flip side of that, you know, what about people who might not have children, ⁓ ⁓ got a very ⁓ clear idea what they would want to happen? You know, a lot of people have ⁓ their fur their pets nowadays, so... Chels: Yeah. Naomi Rendell: What kinds of things should they be thinking about? Chels: Yeah, not every family is traditional. We've passed the days where it was mom, dad and two children. We see blended families, extended families and like you say, we see families where the centre of their world is their fur babies and I'm partly guilty for that. My Labrador is my baby no one can tell me otherwise. ⁓ we see this a lot. So ⁓ in to speak to us, we can make sure that there's also protections for animals. So law, your pet, is legally classed as property. So it's not got the same things that we can do as we could for a human child. we can still appoint someone to care for your animals in your will. We could still leave money to that person for reason of caring for your animals. But I think what's really important is we can explore with you ⁓ different and things that we've seen work in practice. So I know there's lots of charities that do pet schemes ⁓ where register now and if something was to happen to you, they would... take care of your pet and rehome them following your wishes. So there's so much that we can do, but we can only help if we have these discussions. Naomi Rendell: Hmm, I think that would also be comforting for a lot of people knowing that their pets are taken care of and it sounds like there are a lot of options out there. I mean, all of this is quite a sensitive topic, isn't it? People don't really want to talk about death. They don't really want to think about dying. mean, ⁓ you just avoid ⁓ altogether and, you know, have your family? Chels: You Naomi Rendell: sort everything out when you're gone. Chels: I know many people will think exactly the same as you and in fact if it wasn't for having so much experience and having these conversations I would completely agree it's a really difficult conversation by you thinking about... death and planning around that now, one less really difficult thing for your loved ones to think about when you're gone. So if you come to us and speak about your potential funeral wishes and arrangements and we document them either in a letter of wishes or we talk through, make sure they're all practical, means when your family are grieving, they don't have to make those decisions because they know what would have wanted. So even it's sensitive, we are used dealing with these sensitive issues. So we'll always approach them sensitively and also it's one tough decision for someone who's already grieving to make also if you just ignored everything and you came away from this podcast, carried on your life, died, did a will. What applies is something called the intestacy rules. They're not bespoke. ⁓ They don't care what you think and who you love. They're just a strict legal framework passing your assets to the next person in line. And that might be parents. If you've got children, your children would be in there. what I'm saying is this isn't what necessarily would want, not in the conditions you would want. So like we spoke earlier about putting conditions on gifts to children. The intestinacy rules don't care for anything like that. ⁓ And the situation you're left with if you choose to do nothing. ⁓ We would always advise against that and advise that you put something in place, whether that's with us, whether it's something you do yourself, but we would always advise that you consider this and put something in place now for your loved ones. Naomi Rendell: Gosh, yeah, I I think I'm definitely guilty of avoiding the conversation altogether. My in-laws are very responsible and it's something that they want to talk to us about, you know, in terms of planning their estate and what they want to happen and funeral arrangements and everything. they're in their 60s and I just think they are too young to be thinking about it. Chels: You Naomi Rendell: everything that you're is making me think I should engage more in those conversations because it really is just about sure that your loved ones are okay ⁓ and taken care of and you that, what you want happen is what happens you pass away. ⁓ Chels: Yeah, and by having these conversations, you can honour their legacy. So you speak about your in-laws. If you're having these conversations and you know exactly, say for example, what their funeral wishes are, you can honour their legacy and have things exactly how they wish. You're not playing the guesswork. In the time you're grieving, you know actually, this is what my mother-in-law wanted. So it's so worth it. And I really wish more families would be open and discuss it now. Naomi Rendell: Yeah, it's one of those things where you have the difficult conversation now to avoid hundreds more difficult conversations later, isn't it? And what about people who, I mean, you see these advertised everywhere, DIY wills as a cheaper alternative people to do their will ⁓ What are the ⁓ and pitfalls of if any? ⁓ Chels: Yes. You're right. It's really easy to be tempted to think, actually, why get a professional? I can do this myself. And often the people that think are also people that think my affairs are really simple. My estate is simple. My family situation is simple. ⁓ reality, we very rarely see a simple estate and family arrangement. When we start discussing, there could be children with other partners. There's always something under surface. is what I'm trying to say, that by having these discussions with a professional it comes out and we can then tailor your will to cover that situation. if you're going to do it yourself you not think something's important when actually it's really important and we could help you with it. ⁓ There some situations of course where a will, a will someone's done themselves, is appropriate and it does work but these are few rare and I'm of the view ⁓ upfront cost of getting your professionally done now that outweighs the potential risk that something happens with your will so it's challenged in court your loved ones have to go through a lengthy and very expensive court proceeding trying to ⁓ something you've said in your will that might be ambiguous. By getting a professional in now, not only do we draft your will in accordance with your wishes, but we clear records of all the conversations leading up to that drafting and they could be produced in court if needed. So I think cost... Yes, it's a factor and people should consider it, but also the cost of fixing a bad will always outweighs the cost of getting it done properly the first time round. Naomi Rendell: Yeah, it definitely sounds like it's something to be avoided. And I suppose this ties in with ⁓ and people relying on AI like chat GPT get advice ⁓ on this kind of thing. ⁓ I know we're seeing a that in the legal sector at the minute. Is that something that you come across a lot in your work? Chels: Yeah, I've come across it more so now than ever before and... some instances it's quite scary because people input things to Chat GPT and of course, with AI platform that can only work with the things that you input to. It generates that it sort of generally gets on the internet and these aren't reliable sources people can input their own things. So what it means is what you end up with isn't always true. So we've had some people come to us and say I've run Chat GPT transferred my house I live in to my children to avoid inheritance tax. That makes me want to scream inside. before you do anything drastic and take advice off an AI platform, speak to a professional because there could be some really scary tax consequences or other consequences that you've just not thought about and an AI bot wouldn't think about. So we do see it more now. It can have some scary results. I'm not using the platforms for simple things. They're really good and helpful, but it's always worth just proof checking and... talking to a professional who deals with this every day. I think it comes back to what I said a minute ago. cost of getting it professionally done right now, that's nothing compared to where it all goes wrong and it ends up in court and the thousands that you would spend there. Naomi Rendell: Yeah, and I think because it is such a sensitive area as well, it's one of those things, where a Chat GPT team might not be able to read between the lines or be able to ask you the right questions to help you plan your estate in the most effective way. Great, well this has all been incredibly interesting for me personally and I'm sure a lot of our listeners will agree that what you've discussed has been really helpful and there's certainly a lot for me to consider So I just have final question before we let you go. If listeners take away just thing from this episode, what should it be? well thanks again Chelsea for speaking with us today ⁓ and you to everyone listening for joining us. ⁓ If now, like me, feel like you need to start planning for the future ⁓ and like to find out more, ⁓ please our website which has a lot of great content on the subject. If you'd like to speak with someone here, please do feel free to get in touch with Chelsea a member of our Private Client team. I'll some links in this episode's description on how you can do that. ⁓ You also email us at information @howespercival.com Thanks again. ⁓ Chels: One thing I would like listeners to take away from this podcast is that the core of estate planning isn't all about money. In reality, it's all about protecting the people that you love preserving your legacy. ⁓ it's never too early to start these conversations and in reality, it's never too late either. So in whatever situation you find yourself in, feel to reach out and start these conversations.