One of the surprising smash hit TV series of recent years is a straightforward daytime show where time-worn family heirlooms are painstakingly restored by a team of experts.
According to YouGov, BBC’s “The Repair Shop” is the 41st most popular contemporary TV programme, clocking up an impressive 141 episodes since it first aired. Series 6 was watched by an impressive 6.7million people. (In contrast, “EastEnders” gets on average 4million viewers.)
The show is often a tear-jerker, as memories of loved ones flood back when the restored item is revealed to its emotional owners. It illustrates just how important family heirlooms are, and how much they mean to each generation.
Where there’s a Will…
The most effective way to ensure precious objects pass on to the right person is to specify who gets what in your will. This helps you ensure that the person who receives a specific object or item will be the best person to look after it (and not leave it to get woodworm in their garage…).
The same applies to all your assets, including financial assets. Proper bloodline planning (aka succession planning) ensures that the people who will benefit most from a legacy or gift in your will actually receive it. You can also ensure those that you don’t want to benefit from your will, won’t.
This is particularly important in these days of extended families through divorce, second families, and new cohabiting partners. You have to consider how your legacy would help support those closest to you if they are financially dependent on you, especially your spouse or partner.
Mythbusting #1 - the common law spouse
Let’s be clear - there is no such thing as a common law spouse. In the eyes of the law, you are either:
or
- in a civil partnership (which legally is almost identical to marriage)
or
- cohabiting with a partner.
In the first two, your spouse or civil partner has rights in term of inheritance, and associated IHT tax breaks too. A cohabiting partner does not, even if you have lived together for decades and/or have children together. The same applies to any ex-spouse and (to some extent) your children from a previous marriage.
Who benefits?
It’s very important that you make sure everyone you want to benefit is detailed in your will. You need to consider how to:
- Keep your spouse financially secure into old age
- Support children who might be less financially secure than their siblings
- Help adult children who are married especially if you suspect the marriage will not last
The biblical parable of the talents is as true now as it ever was: consider what each person might do with their inheritance: hoard it, spend it or use it wisely.
Long-term care for you
The other consideration is assets you might need to keep in order to fund long-term care in your own old age. Tempting as it may seem to give away assets in order to benefit from the seven-year rule (where gifts given over 7 years before your death are not taxed), you might actually need that money yourself.
Gifts given within the 7-year period have a tax implication, as the HMRC website explains:
“People you give gifts to will be charged Inheritance Tax if you give away more than £325,000 in the 7 years before your death.”
A gift is anything with a value, including property, possession and money. You can give away up to £3000 in gifts each year as part of your ‘annual exception’. (Another reason to pass on that currently tatty heirloom to the kids when it’s not worth too much before The Repair Shop team do their magic and the value goes up!)
Equally, you might require the value of your home to find long-term care, either through selling the family home or using some form of equity release. Both could have implications on he available inheritance for your spouse or children.
Built to last?
Bloodline planning becomes even more important if you are concerned that one of your adult children’s marriage is not going to last, or that the son or daughter in law does not share the family values on money, possessions, etc. Divorce settlements can be costly, and providing for everyone in extended families as a result of second marriages or post-divorce partners can soon diminish the effective value of inherited monies by spreading it too thin.
This is where trusts can help by ring-fencing certain amounts, protecting them from divorce settlements and ensuring only the intended recipients benefit, not their ex-spouses, stepchildren or new partner/s. (See our Trusts page for more details.)
Is your will and bloodline planning up to date?
If we have learned one lesson from the lockdown, it is that your life situation can change remarkably quickly. The value of your estate and your business may have fallen due to the pandemic, or the value of your properties and investment actually risen. Family members may have passed away, or you might now have additional grandchildren. Either way, you’ll need to adjust your estate planning and provisions in your will to reflect these changes.
Call us to book your free will and estate planning update review. We’ll guide you through what needs adjusting, replacing, or updating. With secure online video consultations, you won’t even have to leave home to benefit from our advice.
Panthera Estate Planning
Bloodline planning tailor-made for you and your family