This year’s National Grief Awareness Week takes place between 2 and 9 December.
Setup by the Good Grief Trust, the week aims to highlight the range of services available to those affected by and dealing with grief. By talking about loss, the charity hopes that it can help to break the taboo of discussing bereavement and make us all better at acknowledging our own mortality.
From having a will and a power of attorney in place to discussing wishes with family members, estate planning is a vital part of any financial plan. And not just for economic reasons.
Recent reports have found that dealing with a loved one’s estate is becoming increasingly stressful for those left behind, despite government efforts to cut red tape.
Here’s why robust estate planning and difficult conversations are key to relieving the stress and worry of loved ones at an already difficult time.
Bereavement will affect us all at some point in our lives
Bereavement specialists Exizent released their Bereavement Index 2022 earlier this year.
It found that 23% of people found the bereavement process “extremely stressful” while 55% confirmed that they had suffered “mental health issues” while administering an estate.
These figures mark an increase from 5% and 40% respectively in 2021.
Overall, in 2022, a massive 95% of people found some part of managing an estate stressful.
Putting a will in place is the best way to protect loved ones
A will is the simplest way to make sure that our wishes are carried out when we die. But discussing those wishes with affected parties is also vital.
Will disputes rose dramatically during the coronavirus pandemic.
Banishing the taboos around discussing death and taking the time to explain the decisions in a will should help to avoid arguments and potential disputes.
This is especially important where an estate isn’t being split evenly or the contents are otherwise liable to cause friction.
Gifting can lower the value of an estate for Inheritance Tax purposes
Financial advice can help an individual to manage their estate tax-efficiently. This can help avoid an unexpected Inheritance Tax (IHT) bill after a death.
One way to manage an estate tax-efficiently is to lower the estate’s value during an individual’s lifetime. This can be done through gifting.
While most gifts made during our lifetimes are tax-free only if we survive for seven years after making the gift (known as the “seven-year” rule), some HMRC exemptions allow for tax-free gifting, no matter how long we live after making the gift.
These can be useful for lowering an estate’s value throughout an individual’s life. The most common exemptions include:
The annual exemption
It is possible to gift up to £3,000 each year, with no IHT to pay. The limit is an individual one so is doubled for a couple. And it can be carried forward for up to one year.
Normal expenditure out of income
Making regular payments to support a loved one – by paying into their pension or an investment on their behalf – is a great way to support them while lowering an estate’s value.
Regular gifts can be made tax-free as long as the gift is made from income and doesn’t detrimentally affect an individual’s standard of living.
Small and exempted gifts
Gifts of up to £250 can be made at any time. Wedding gifts are also tax-free, up to certain limits: £5,000 for a parent, £2,500 for a grandparent, and £1,000 for non-relatives.
Bridging the knowledge gap
Exizent’s Bereavement Index highlights how little people understand about estate administration.
In fact, the 2022 survey found that only 1% of individuals profess to know “a lot” about the process. This compares to 44% who admit they know “nothing at all”.
Worryingly, the report found that more than a fifth (22%) of individuals who found themselves executor for a will were unaware that this would be the case before their loved one passed away.
A surprise appointment as a will executor is likely to mean that the individual doesn’t have the necessary knowledge of the estate. This will undoubtedly make the process very stressful at a time when they are grieving and make it very clear how vital clear communication on this difficult topic can be.
Get in touch
Dealing with a bereavement is stressful enough without the additional worry of administering an estate. Professional financial advice can help individuals to manage their affairs tax-efficiently and protect the financial and emotional wellbeing of those they leave behind.
If you have clients who would benefit from long-term financial and estate planning, please get in touch. Email email@example.com or call 0116 240 7070.
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.
“At Boolers, you know that things will be dealt with properly and professionally. A real safe pair of hands!”
“I have always found the quality of advice, technical knowledge and level of service is second to none. ”
“Thank you to all of you for such a wonderfully smooth transaction! Hope we can do it again some time.”
“Boolers provided excellent advice when we needed it most.”
“Boolers have provided myself, family and business with pension and investment advice for over 30 years and continue to provide a high quality professional service to us all on an ongoing basis.”
“Chris Ball has been our Financial Adviser for many years and, from the start, we have been impressed with his strategic sense, his deep knowledge and his skills in helping us build our own successful retirement. He understands our aims and how to achieve them and has taken great care of us throughout. ”