Estate Planning

Why the conversation needs to start earlier than you think 

Making a Will and deciding what should happen to our money after we die are tasks many of us know we ought to deal with, and yet they are remarkably easy to postpone.

For some, the obstacle is simply finding the time. For others, talking about death, inheritance and money feels uncomfortable. And occasionally there is an almost superstitious reluctance to put plans in place. 

Stuart Ritchie, Principal of Ritchie Phillips, recalls a friend who used to insist that she wasn't going to make her Will because, once it was done, “God can take me”. 

It was an irrational fear, as she acknowledged, but one powerful enough to make her delay. Eventually, following a conversation with Stuart, she did make a Will. It was particularly important because she had a blended family and wanted to ensure her wealth ultimately passed to her two daughters. 

The story illustrates a much wider point. Estate planning can be easy to put off, but failing to make decisions does not mean that no decisions will be made. It may simply mean that the law, rather than you, determines what happens to some or all of your estate. 

And with inheritance tax rules continuing to change, Stuart believes there is an increasingly strong argument for starting the planning process sooner rather than later. 

Start with what you want to achieve

Estate planning can sound complicated, but Stuart believes the starting point is relatively straightforward. Before worrying about individual documents or tax rules, decide what you actually want to happen.

“Most individuals pretty much know what they want to achieve,” he says. 

That might mean leaving everything to a spouse before ultimately passing wealth to children. It could involve providing differently for individual children, making gifts to charity, dealing with a family business or ensuring particular assets pass to particular people. 

Once those intentions are clear, professional advisers can help put the appropriate arrangements around them. 
A Will will often be central to the plan, but it may not be the only document required. A Letter of Wishes, for example, can provide additional guidance about how certain powers contained in a Will should be exercised. Pension arrangements and nominations may also need to be considered separately. 

The objective is to turn a general intention of “this is what I want to happen”, into a properly constructed plan.

One size does not fit all

The internet provides an enormous amount of information about Wills, inheritance tax and estate planning. Stuart's concern is not that general information has no value, but that it can never take full account of an individual's circumstances.

“There is a world of a difference between what you might read on the internet, which you might say is rather generic, if nonetheless quite interesting, to actually having something that is bespoke made for yourself,” he says.

That distinction becomes increasingly important as financial and family affairs become more complicated. A blended family may require particular thought about how assets should ultimately pass between a spouse, children and stepchildren. A family with a child with a disability may wish to make different arrangements for that child from those made for their siblings. 

Business owners have another set of considerations, while property, pensions, trusts and overseas interests can all influence the appropriate structure. Estate planning is therefore not simply a question of finding the theoretically most tax-efficient arrangement. The plan also has to work for the particular people involved. 

Why transparency can matter

Once a plan has been created, there can be considerable value in talking about it. Stuart has spent almost 40 years advising individuals and families and has seen how different family dynamics can affect the transfer of wealth.

Where possible, he advocates open conversations. That doesn't necessarily mean disclosing every figure or financial detail. It means ensuring that the people who will eventually be affected have an appropriate understanding of what has been arranged.

Executors are a simple example. Someone may have agreed to act as an executor 30 years ago but never subsequently discussed the matter. In other cases, a person may be named as executor without even knowing it. 

Likewise, beneficiaries who have very different expectations about what they will inherit can face an unpleasant surprise after a death.

Transparency will not be appropriate or possible in every family. Where relationships are particularly difficult, Stuart says a trusted independent adviser can play an important role in understanding and documenting the client's intentions. The crucial point is not to allow a difficult conversation to become an excuse for having no plan at all.

Estate planning can bring peace of mind

One of the misconceptions surrounding estate planning is that confronting death will inevitably make people more anxious about it. Stuart's experience suggests that putting a plan in place can have the opposite effect.

Once the appropriate documents have been completed, the plan can largely be put away. Nothing necessarily has to happen immediately. Instead, the arrangements sit in the background until they are required. That can provide reassurance that the necessary decisions have been made and that those responsible for administering the estate will know what is expected.

Good planning is therefore as much about creating certainty during life as it is about administering assets after death.

Don't overlook the question of cash

Another important part of estate planning is considering how an inheritance tax liability will actually be paid. An estate can be extremely valuable on paper without containing large amounts of readily available cash.

Land, houses, business interests, works of art and valuable collections may all contribute significantly to the value of an estate, but they cannot necessarily be turned into cash quickly. 

Inheritance tax is generally due by the end of the sixth month after the month in which the person died. That can create a practical problem if substantial tax is payable but the estate consists largely of illiquid assets.

Stuart therefore encourages people to think about liquidity as part of the planning process.

Depending on the circumstances, investments that can be realised relatively quickly may provide the answer. In other cases, appropriately structured life assurance can potentially provide funds following death.

The important question is not simply, “How much inheritance tax might my estate have to pay?” but also, “Where will the money to pay it actually come from?”

Why more people need to think about inheritance tax

This question is becoming increasingly relevant because inheritance tax thresholds have remained frozen while asset values have increased.

The standard inheritance tax nil-rate band remains £325,000 and is now fixed at that level until April 2031. An additional residence nil-rate band of up to £175,000 may also be available in qualifying circumstances, although it begins to taper where an estate exceeds £2 million.

Freezing thresholds while property and other asset values rise creates what is commonly known as “fiscal drag”: without any change in the headline tax rate, more wealth can gradually fall within the scope of inheritance tax. That means families who historically assumed inheritance tax was something that affected only the very wealthy may need to reconsider their position.

Pensions and inheritance tax from April 2027

A further significant change takes effect for deaths on or after 6 April 2027. From that date, most unused pension funds and pension death benefits will be brought within an individual's estate for inheritance tax purposes.

The change could be particularly important for people who have accumulated substantial pension wealth while also owning property and other investments. It may not simply increase the amount of an estate potentially subject to inheritance tax. Adding pension wealth to an estate could also affect entitlement to the residence nil-rate band where the overall estate exceeds the £2 million taper threshold. 

The Government estimates that around 10,500 estates with inheritable pension wealth in 2027/28 will become liable for inheritance tax where they would not previously have been, while around 38,500 estates are expected to pay more inheritance tax than under the previous rules.

For anyone with significant pension savings, this makes reviewing an existing estate plan particularly important. 

Farms and family businesses

There have also been important changes affecting agricultural and business property. For deaths and other relevant transfers from 6 April 2026, 100% Agricultural Property Relief and Business Property Relief is generally restricted to a £2.5 million allowance of qualifying property. Qualifying value above the available allowance generally receives 50% relief.

Unused allowance can be transferred between spouses and civil partners, potentially increasing the available 100% relief allowance to £5 million on the survivor's death or £5.625 million if two nil rate bands are available too. For farming and business families, however, Stuart believes the issue goes beyond calculating the eventual tax bill.

It forces a much more fundamental conversation about succession.

Who is going to run the business or farm in the future? Is there somebody within the family who wants and is able to take it on? Should ownership begin passing to the next generation during the current owner's lifetime? Or might a future sale ultimately be appropriate?

These are not decisions that are easily made following a death. Starting the conversation early gives families much greater scope to consider their options.

A plan should change when life changes

Estate planning should not necessarily be viewed as something that is completed once and never considered again. Families change. Children grow up. Relationships begin and end. Businesses are created or sold. Property values rise. Wealth changes and tax legislation evolves.

An estate plan that made perfect sense 15 or 20 years ago may no longer reflect either current circumstances or current intentions. Even something as straightforward as checking who has been appointed as an executor, and whether that person remains appropriate, can be worthwhile.

The most important step is to start

Stuart's final piece of advice is simple: take advice and don't leave it until it is too late. That doesn't mean every aspect of an estate has to be reorganised immediately.

The first stage is understanding what you own, thinking about the people or causes you ultimately want to benefit and deciding what you would like to happen.

From there, professional advice can identify the documents, tax planning and other arrangements needed to turn those intentions into a workable estate plan.

Perhaps most importantly, starting early allows these decisions to be made calmly.

Estate planning undertaken during a family crisis, following a serious diagnosis or when time is running out can become emotionally and practically difficult. A plan made years earlier can simply sit quietly in the background, reviewed periodically and adjusted when circumstances change.

As Stuart's experience demonstrates, estate planning is not just about reducing inheritance tax. It is about creating clarity: deciding what should happen, making sure the appropriate arrangements are in place and leaving the people who eventually have to implement those wishes with as few uncertainties and surprises as possible. 

If you would like to discuss any of the matters raised in this article, please get in touch.