A recent study has revealed that 47 per cent of all UK adults have never discussed inheritance matters or succession planning with their families.

For most people, their thoughts on succession issues begin and end with a visit to a solicitor to put a Will in place. Whilst a well-structured Will is an important part of any succession plan, there are many other areas that need to be considered and discussed with your family, particularly if there are business interests or significant wealth involved.

Three of the most important areas to discuss are:

1. Your Lasting Powers of Attorney (LPAs)

These are documents which are put in place so that the individuals you appoint (known as your attorneys) can make decisions on your behalf if you lose capacity.  Whilst an LPA allows you to include guidance on the document itself, it is worthwhile discussing your preferences with your attorneys in advance. The problem with including guidance on the LPA is that it cannot be removed at a later date. Therefore, it may be better to set down your thoughts down in a document known as a letter of wishes. You can update your wishes at anytime without impacting on the LPA. This is particularly important in relation to your preference about life sustaining treatment which may change over time as medical science advances

 

2. Your Will

Your Will may establish one or more trusts. A trust could be used to save inheritance tax but these days, is more likely to offer protection to family members who suffer financial or matrimonial difficulties. If you have not discussed the reasons why you have included such provisions in your Will, it may come as a shock to your family.

 

3. Your business

If you are looking to pass on your business to family members, engaging in this process during your lifetime will encourage the next generation to put forward their ideas for the future benefit of the business.

 

Step forward the family charter

A family charter is a statement of intent or agreement entered into by family members in relation to the family wealth and/or business. Although they normally have no legal standing they are a useful way to agree a set of ‘house rules’ which governs the investment and use of the family wealth/business.

A family charter could include:

  • The family’s goals and values
  • Communication and family meetings
  • Reviewing the charter and making change
  • The family council
  • The family’s vision for the future of the business.

 

This article first appeared in Devon Life, November 2017