How do you tackle the awkward business of estate planning?

Jeremy Cleminson advises everyone from people in their 20s, just starting out in their investment journey, to elderly people needing long-term care. He works with trustees, and with company directors, putting in frameworks for businesses.

One of the areas where he finds he can add most value is in estate planning. He shared his approach with us, and some key things to think about.

“I think the first thing is that I don’t see myself as adviser to the individual, but to the whole family. But this can be a difficult idea for people to get their heads round! In an ideal world, my clients – often high earners who I’ve worked with on income tax planning – want to plan ahead to reduce their inheritance tax (IHT) liability.

“Every time I sit down with a client to talk about estate planning, I ask them whether their family knows what they have and what their intentions are. Almost always, the answer is ‘no’!

“I understand why. It’s a difficult conversation to approach, but also very important.

“Sometimes, I’m able to have those conversations for my client, and sit down with members of their family to establish THEIR needs and objectives. When money travels down, it is highly valued, and most people want to take advice. I can help the family to make the most of it, and to avoid conflict.

“I recently worked with a client in their seventies, who had lost their spouse. This client receives a substantial final-salary pension but spends only a small portion of it. Both of the client’s adult children are financially secure and self-reliant, with no expectations or desires for inheritance. Consequently, my role involved encouraging the client to either increase their spending or engage in a discussion with their children to determine how to utilise the surplus income. It’s worth noting that surplus income, if given away, may be exempt from IHT, provided certain guidelines are followed.  I like the phrase ‘it is better to give with a warm hand than a cold one’.

“However, many individuals are hesitant to part with their wealth during their lifetime, because once gifted, they lose control of it.  Trusts offer viable alternatives for individuals who share this sentiment, providing greater control and discretion.

“Often my job is to encourage people to save and invest. But sometimes, it is also to say – you can afford to spend it! And better to spend it than to save it for the tax man…”

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