finance 21


Will planning and today’s family


Family life has changed considerably in recent years and dealing with family matters such as will planning can be quite complicated, writes Karen Harwood of Rice Associates


Take as an example a child of a mother married three times, a father twice and a number of stepchildren from the various relationships.


The mother owns a house jointly with her husband valued at £300,000. She has other assets in her name of £400,000. The stepfather has other assets of £100,000. The potential IHT payable on their joint estate is £60,000 and will become due on the second death. This liability is not inconsiderable and with planning could be reduced to nil.


However, this is not their main consideration when planning their wills. The mother wants her husband to be able to benefit from all of her assets but wants to ensure that her wealth ultimately passes to her three children. Similarly, the stepfather would like his children to inherit, so how should they plan their estates?


We might suggest that they both leave their share of the matrimonial home to each other. This will ensure that they each have control over their home for the remainder of their life. The stepfather’s estate will pass to his children as the mother feels she has sufficient assets in her own right. Whereas the mother’s residual estate will pass on to trust for the benefit of the stepfather during his life and her children will become entitled to the capital after his death.


The stepfather will receive the income arising on trust investments for life and will have access to trust capital at the discretion of the trustees. Choosing the trustees with care and preparing a letter to the trustees setting out the mother’s wishes is very important.


The father and stepmother do not have wills. They jointly own a property worth £250,000 and have other joint assets of £150,000, so IHT is not applicable. The father is in poor health and his main concern is providing for his wife.


Without a will the intestacy rules will apply. These can be complicated and assets do not always pass in accordance with the deceased’s wishes. However, in the father’s situation the intestacy rules are unlikely to have any affect as all jointly owned assets will pass to the survivor provided the joint tenancy has not been severed.


But what happens when the stepmother dies? Her entire estate will pass to her only daughter, as stepchildren are not recognised under the intestacy rules. The stepmother wishes for her estate to pass to her grandchildren, so it is essential that she has a valid will to achieve this.


This family represents some of the issues facing modern families and the above examples show that there are many important issues to consider when drafting your will. With planning it should be possible to mitigate potential IHT liabilities and ensure that your assets actually pass in accordance with your wishes.


Details: Karen Harwood 0118-9899780 karen@rice-associates.co.uk


Employers feel responsible for employees’ financial security


Research has recently been published into how financial behaviours are changing in the relationship between employers and employees


The research is an insight into the role of the workplace in taking control of financial security and is based on a survey of 250 employers and over 1,000 employees within the UK’s largest companies.


Among the key findings was that eight in 10 employers feel responsible for their employees’ financial security with nearly a quarter (22%) feeling it is their primary responsibility.


According to the research employers believe that employee communication has improved over the past five years (65%). However, almost the same number (64%) of employees felt that either nothing has changed or the situation has deteriorated. Though when asked about support with financial planning, three quarters (75%) of employees stated they would value more help from their employer. Two thirds (64%) of employers said that they thought offering help through financial planning would make them more attractive to potential new employees.


Neil Buckingham, managing director at Griffins Financial Solutions, says: “ The research carried out on behalf of Standard Life provides new and meaningful insight into the employer- employee relationship and its influence on financial behaviour. What’s clear is that since the downturn, employers feel more responsible for their employees’ financial security and employees in turn are looking to their employers for help with financial planning. Against the backdrop of a reduction in government support and the closure of final salary schemes, it is critical that employers take on a new active role in helping their staff plan for the future.”


Additional findings from Standard Life’s research include:


• Two in five (38%) employers expect their employees to


THE BUSINESS MAGAZINE – THAMES VALLEY – MAY 2011 www.businessmag.co.uk


Neil Buckingham


spend more than 10 years at their organisation. Just under half (48%) of all employees expect to spend more than a decade with their employer


• Over half (56%) of employers think the role of providing support and security to employees is more important than five years ago


• Eight in 10 (81%) employers agree that providing benefits increases the level of employee engagement. Two thirds (66%) of employees agreed that benefits increase motivation at work


• Two in five (40%) employers believe over half of their employees take full advantage of the benefits available to them with one in three (30%) having no idea about the level of uptake of benefits. Only a quarter (25%) of employees say they make full use of their benefits.


Details: Neil Buckingham 01635-551333 n.buckingham@griffins.co.uk www.griffinsfinancial.co.uk


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