Attitudes towards money have changed in recent years and many of us are more open about our finances than ever before. Despite this, you might still find it difficult to talk to your family about money.
You wouldn’t be alone in this, as IFA Magazine reports that 34% of people rarely or never have conversations about their wealth with family.
Failing to plan with your loved ones could create challenges and make it more difficult for everybody to reach their goals. Fortunately, the entire family will benefit from opening a dialogue.
You can prepare for the cost of later-life care together
Paying for later-life care is one of the most pressing financial challenges that older people face. Unfortunately, research reveals that 40% of those surveyed have no plans for how they will cover this expense.
This could be a serious problem because, according to UK Care, the average cost of a residential care home in 2025 ranges from £27,000 to £39,000 a year. These costs rise to £33,000 to £55,000 if you require nursing care.
While the local authority may cover some of this expense, you only receive support once your total assets fall below the upper capital limit (UCL) of £23,250.
This means you may have to cover the cost yourself and, if you don’t have sufficient funds, you might even need to sell your home.
Without a plan, you could significantly deplete your assets and leave far less than expected to your beneficiaries when you pass away. This could disrupt their own financial plans if they had expected a much larger inheritance.
Alternatively, family members might need to use their own wealth to help you manage high fees or even move you into their own home and care for you themselves. Both options could put additional financial strain on them and make it harder to achieve their own aims.
You might be facing this problem with your own parents and could eventually need to discuss it with your children too.
By planning ahead together, you can explore the various ways you might pay for care and potentially build additional wealth now, so you can reduce the financial burden on the family later. Crucially, this could mean you avoid having to sell your home and spend all your savings, so you can pass more wealth to the next generation.
Estate planning conversations allow you to share your wishes with your family
A will that outlines your wishes is the foundation of your estate plan. However, the data from IFA Magazine shows that 40% of UK adults haven’t completed this important step.
While many of these individuals may be planning to create a will in the future, 14% said they would simply leave it to their family to deal with their estate.
This could mean the family is left with lots of administrative tasks, creating more stress during a difficult time. Leaving everything up to your loved ones could also mean they don’t manage the estate in the way you hoped.
However, if you communicate your wishes to your family now, you have far more control over how your estate is managed when you pass away. Having a clear plan in place could also make the process far less stressful for your loved ones.
Additionally, you can set clear expectations about who will inherit what from the estate. This allows your beneficiaries to start planning how they will use the wealth, meaning everybody is more likely to achieve their goals.
Discussions about lifetime gifting help you support everybody’s goals
If you manage your financial plan in isolation, you are making assumptions about the most effective ways to pass wealth to your beneficiaries.
You may create an estate plan which divides your wealth between your loved ones when you pass away, with the hope they can use these funds to achieve their own financial goals.
However, when they receive this inheritance, your children could easily be in their 50s or 60s. By this time, they may have reached important milestones such as buying a house and raising a family of their own.
Meanwhile, children in their 20s and 30s may be struggling to achieve these goals.
As a result, they might prefer to have the money now, rather than waiting to inherit from your estate. On the other hand, some people may prefer to receive the inheritance later in life so they can use the wealth to help fund their retirement.
That’s why you may want to ask your children about their own financial aims and whether they would benefit from lifetime gifts, rather than an inheritance when you pass away. Passing wealth to your loved ones now could also help you mitigate Inheritance Tax (IHT) and achieve important tax planning goals of your own.
Consequently, an open conversation about inheritance could make it easier for the entire family to reach their financial goals.
Get in touch
We can facilitate these conversations with your family and help you implement solutions that work for everybody.
Please get in touch or email us at advice@mlifa.co.uk for more information.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.