5 simple tips to help you feel more comfortable talking about money and estate planning with your family

Money remains one of the great conversational taboos – and this can be magnified if the discussions you want to have concern planning your estate.

The Co-op reports that more than half of the nation – 32 million people – say that talking about death, dying, and bereavement is the “elephant in the room”. So, perhaps it’s unsurprising that you might not want to have these tricky conversations with your loved ones.

Indeed, MoneyAge reports that 27% of high net worth individuals find talking about money and wealth planning with their immediate family to be uncomfortable. Moreover, 10% of these even said they avoid talking about money and long-term financial plans due to fear of disagreements.

Failing to tackle these issues could have negative consequences for both you and your loved ones. JP Morgan reports that breakdown of communication and trust account for 60% of wealth transfer breakdowns.

To help you, read on to find out why it’s important to talk about your estate plan and five practical tips for holding these conversations.

Unrealistic expectations, crossed wires, and tax – why you should talk to your family now

There are several reasons why a failure to discuss your estate plan could have negative consequences for those close to you.

Your beneficiaries may not understand your wishes

Accidents, illness, or injury can strike at any time. If you suddenly find yourself losing mental capacity, or having to spend an extended period in hospital, your loved ones may not be able to manage your affairs without the right Lasting Power of Attorney (LPA) document in place.

Similarly, after your passing, many financial decisions may need to be made quickly. If your loved ones don’t understand your wishes, or can’t locate your will, they may not be able to make the necessary arrangements.

Unrealistic expectations

Without practical conversations, beneficiaries may have unrealistic expectations about the inheritance they may receive.

Brewin Dolphin reports that almost half of children said they “never” expect to receive financial help from their parents, whereas more than 9 in 10 parents with more than £1 million in savings and investments intend to pass on wealth during their lifetime or when they die.

If your loved ones find out you have passed on less than they anticipated, this discovery can lead to a strong emotional response, including potential resentment, at what will already be a stressful and emotional time.

If they receive more than they expected, this could lead to rushed decision-making that fails to support their longer-term goals.

And it’s not just your beneficiaries who may have unrealistic expectations – you may too.

For example, if you own a holiday home, your intention may be to leave this to your family to enjoy in the future. However, while this may sound positive, your children or grandchildren may not want to holiday in that location or take on the responsibility for maintaining such an asset.

Potential Inheritance Tax issues

In the 2024/25 tax year, you can usually pass on up to £325,000 on your death without IHT being due. This threshold could increase by £175,000 if a direct descendant inherits your main residence.

If you’re married or in a civil partnership, you are normally able to transfer any unused allowance, meaning you could leave up to £1 million before IHT is due.

If this may be a concern for you, early planning can help you to mitigate any potential liability.

For example, if you make a gift to your beneficiaries at least seven years before your passing, they may not have to pay IHT on the value of these gifts. This is known as a “potentially exempt transfer”.

Having these conversations early can give you more time to plan and enable a tax-efficient transfer of wealth.

5 tips for talking about your estate plan with your loved ones

1. Think about what you want to achieve

As you read above, there are many good reasons to have discussions about inheritance. A good way to start is to list the areas you hope to resolve during the discussion. Issues you may want to consider include:

• Setting up LPAs for financial affairs and healthcare, so that you have someone you can trust to make decisions on your behalf if you cannot
• Explaining the wishes in your will
• Setting expectations about the level of inheritance and discussing specific areas that are likely to be contentious, including property and sentimental/valuable items
• Making the most of rules and exemptions around IHT and how you might transfer wealth – not just on death.

Some jotted-down ideas can help to focus your mind.

2. Understand that your loved ones may be nervous too

Remember that it may not just be you who is uncomfortable about having this conversation.

Your adult children or grandchildren may also be nervous about raising the topic of your finances for fear that they may appear greedy, intrusive, or insensitive.

The hardest part of communicating your plans is simply starting the conversation. You could start by talking about your own experience with money and the factors that led to your wealth, such as disciplined spending and investment decisions.

Discussing where wealth came from can help your beneficiaries understand that these assets did not just happen by accident. This can help you reinforce that your loved ones are being entrusted with an opportunity and that they should manage this responsibly.

3. Try and have the meeting in person

Talking about your estate plan is likely to be a conversation that is better in person than over the phone or by email. It can also make the chat more personal and less businesslike.

Do remember to plan a good time, though – your Christmas dinner is unlikely to be the optimum opportunity!

4. Make sure you cater for now

When talking about your estate plan, it’s important to factor in your own current and future needs.

As life expectancies rise, you’re increasingly likely to need some sort of later-life care. Consequently, you need to incorporate the potential for this into your estate plan.

If you’ve given all your assets away and subsequently incur these costs, the burden may then be on your children or grandchildren to cover them.

5. Work with an expert

Conversations about money can be tricky, so having a discussion with an independent third party can add value.

For example, you could ask your children or parents to join a meeting with your planner to help guide the conversation and explain the financial ramifications of certain courses of action. Or, your planner may be able to help you choose the right words to explain your wishes to your children.

Creating a robust estate plan can help you manage the intergenerational transfer of wealth in a way that works for you and your family. To find out more, email us at info@harperlees.co.uk or call 01277 350560.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate estate planning, tax planning, trusts, Lasting Powers of Attorney, or will writing.