E48: Are you ready for the ‘great wealth transfer’? With Niaz Azad, Annaliese Barber, and Dan Stean

The following is a transcript of a bonus podcast episode of The Pension Confident Podcast. Listen to the episode or scroll on to read the conversation.

Takeaways from this episode

• The UK is set for a £5.5 trillion ‘great wealth transfer’ over the next 30 years - this transfer will largely go from Baby Boomers to their Millennial beneficiaries, creating an ‘inheritocracy’ in the UK.
• Inheritance Tax (IHT) rules are changing - pensions are expected to be included in estates for IHT from April 2027, likely pushing many more estates over the £325,000 threshold.
• Wills are essential to avoid accidental disinheritance - with modern family structures (cohabitation, remarriage, stepchildren) without a valid will your estate will be left in ‘intestacy’.
• Gift allowances matter - there’s a £3,000 annual exemption, plus small gifts of £250 per person (not the same recipient as the £3,000), and wedding gift exemptions. Gifts fall outside the estate after seven years.

PHILIPPA: Welcome back. Did you know that over the next 30 years, Baby Boomers are expected to pass down an astonishing £5.5 trillion in assets? It’s being called one of the largest movements of wealth in British history. So whether you’re sitting on valuable assets, or maybe hoping to receive some through an inheritance or a gift, are you ready for this ‘great wealth transfer’?

Many Millennials are facing tough financial challenges - lingering student loans, high rent, mortgage costs, and of course expensive childcare for some. So this wealth transfer, it could be transformative for some of them. But here’s the catch: without proper estate and financial planning, many families could face hefty tax bills. And from April next year, pensions will be included in estates for Inheritance Tax purposes, and that could push that tax bill much higher.

So how can families financially, and personally, prepare for this great wealth transfer? I’m Philippa Lamb. If you have a moment, go and hit that subscribe button so you catch every episode as soon as it airs.

Here with me for today’s discussion, I have Niaz Azad. He’s the Co-Founder of Millennial Money UK, an online platform that’s reshaping the conversation around money for young people.

Annaliese Barber’s with us. She’s a Solicitor and Director at Richard Reed Solicitors. She’s also the Head of Wills, Trusts, Probate, and Court of Protection Department - that’s a mouthful, Annaliese - with over 20 years of experience advising families about how to plan and around wealth transfers.

And from PensionBee this time, we’re joined by Senior Performance Management Manager, Dan Stean. He’s in the middle of a house move right now, having been both a diligent saver and recipient of a lump sum gift in his 20s.

I’m just going to start with the usual disclaimer. Please do remember anything discussed on the podcast shouldn’t be regarded as financial advice or as legal advice, and when investing, your capital is at risk.

Hello everyone.

ALL: Hello.

Planning for an inheritance

PHILIPPA: So Dan, as I said, you were fortunate enough to receive a bit of a windfall.

DAN: Yeah, very fortunate. So my grandmother passed away about two years ago and in her will I was one of the beneficiaries. And me and my siblings knew for a while, so I was able to actively plan a little bit.

PHILIPPA: Ah!

DAN: I didn’t know the monetary amount, but I gauged, so I was able to divvy up into “I’m going to invest this amount, I’m going to treat myself with this amount” and just planned for it - which is very ‘type A’. But I know some people would probably get it and then, you know, go off on holiday for four weeks or buy a car or something like that.

PHILIPPA: And did you stick to your plan?

DAN: I did stick to my plan. I had it all typed out on my laptop and my wife said to me, “Oh, what’s that?” and I was like, “Oh, I’m just planning how to spend money I haven’t got yet”.

PHILIPPA: Yeah, that’s a nice way to spend an afternoon, right?

DAN: Yeah, exactly. She did raise an eyebrow.

PHILIPPA: What about you two? Have you inherited or been gifted money?

NIAZ: I did. I’ve received a small contribution to my very expensive year last year. So I managed to buy my first house and decided to get married within the same two months.

PHILIPPA: OK, a big and lovely year.

NIAZ: Yeah, big and lovely and expensive year.

PHILIPPA: Yeah. Did you know it was coming?

NIAZ: I didn’t know how much.

PHILIPPA: Oh yeah.

NIAZ: And I didn’t know what or when, but I knew that I might be gifted something. So it was harder to plan for because obviously it’s a very privileged position to be in and I’m very grateful. So I didn’t want to push it either, but I don’t know, it’s not that my Dad would’ve minded, but I sort of -

PHILIPPA: it’d feel weird though, wouldn’t it? “Dad, I know you’re going to give me some money, how much are you going to give?”.

NIAZ: So I can plan, right? And it actually did make it trickier planning for the year because I didn’t know, even despite having been given a gift.

PHILIPPA: Yes. Annaliese?

ANNALIESE: Oh, it’s a long time ago, but I had the choice of a wedding or a house deposit - and I took the wedding!

PHILIPPA: Why are you looking like that was a mistake?

NIAZ: I think [it’s a] good choice.

Generational divide between Baby Boomers and Millennials

PHILIPPA: Shall we rewind a few decades? Because we’re talking about all this money, but Anneliese, where does all this money come from? How is it that Baby Boomers - and I should say, I mean, this is people born between about 1945 and 1964.

ANNALIESE: Yeah.

PHILIPPA: How did they become the wealthiest generation we’ve yet seen?

ANNALIESE: So a combination of really good timing. So you’ve got them benefiting from historical timings. They’ve got the whole post-war recovery where Britain’s sort of booming, as it were. You’ve got stable wages, you’ve got high job security, houses were affordable, and then you’ve got this huge surge in property values that benefited from that. Education, if you went into higher education, it was usually free or low cost.

PHILIPPA: Yeah, you could get grants.

ANNALIESE: Yeah.

PHILIPPA: Not loans, grants. Imagine.

ANNALIESE: You actually got paid for going to uni. Imagine that. But at the time, I guess less people went to university, pensions were so [much] more generous. There were defined benefit pensions, and they had a guaranteed income at the end. I guess we’d call it ‘gold-plated pensions’, really.

NIAZ: A whole load of pension millionaires from that generation.

ANNALIESE: Yeah. I come across that all the time with clients. And also they benefited from the whole intergenerational wealth transfers as well. So there was a whole, I think it’s historical timing and just being [at the] right place, [at the] right time, really.

PHILIPPA: I tell you what I always think. I always think for [the] Baby Boomers who didn’t benefit from all this. It must be really annoying being characterised as a super wealthy generation, because obviously some people have done astonishingly well, but there’s going to be a whole bunch of people who really didn’t. So we do need to keep that in mind as well, don’t we? But the other thing I wonder about is how different things look from a Millennial point of view.

NIAZ: Yeah, it’s the other end of that spectrum, right? Because I was [in] the first year [of students] that had the increase in tuition fees for universities.

PHILIPPA: Were you?

NIAZ: The 200% increase. Yeah, so I’ve got people in my workplace who’re on the same income as me, for example, and a few months older, and like they’re so shocked by the difference in our take-home pay because of -

PHILIPPA: it’s really, really big?

NIAZ: It’s really noticeable. And unless you’re in that, I guess, those few years, you wouldn’t really realise how different it actually is. So [a] 200% increase in student loan tuition fees. We also came into the job market off the back of a global financial crisis -

PHILIPPA: 2008 crash.

NIAZ: Yeah, the scarring effects of all of that. And then obviously property prices were hugely inflated by the time we’re in our wealth accumulation phase of our lives as well.

PHILIPPA: And we haven’t seen much accumulation on that since.

NIAZ: Yeah, exactly. So it’s really different. And like you say, it’s just a different set of circumstances and opportunities. I always like to be a bit more positive about it as well. It’s a different set of opportunities.

ANNALIESE: The whole ‘SWOT’ analysis.

PHILIPPA: Yeah, ‘Strengths, Weaknesses, Opportunities, Threats’ (SWOT). I mean, Dan, this is you too.

DAN: Yeah, I think seeing it as an opportunity is good. Even in the last five-year period where markets have gone down, people will panic, but it’s quite a good opportunity to then put some money in, whether it’s Stocks and Shares ISAs, normal ISAs, or even your pension. If your pension does go down, people might panic, especially if you’re towards retirement age. But some people my age, like 20s or 30s, where you can’t access it, you might see it as an opportunity to put some money in and hopefully reap the benefits of it in the future.

From meritocracy, to inheritocracy

PHILIPPA: Well, yeah, it’s interesting, isn’t it, what this huge transfer of wealth is actually going to mean for Millennials as a generation?

NIAZ: Yeah, absolutely. I think it comes with a change in values as well. So I think there’s a lot of agency that moves with money, right?

PHILIPPA: Yeah.

NIAZ: I remember having a conversation a couple of years ago about what it’ll mean for all this money and influence. Because actually with money comes a lot of influence.

PHILIPPA: Sure.

NIAZ: And actually the numbers are, I think it’s [over] $100 trillion. I know in the UK it’s £5.5 trillion, but globally it’s seen as $100 trillion. I think that’s because $86 [trillion] is within the US.

PHILIPPA: $100 trillion! Just pause for a moment and think, I mean, that’s a serious number even by global financial standards.

NIAZ: Exactly. And I think intergenerationally there’s a bit of anxiety as well, because what will it mean for the world when all this money moves and you have a generation with a certain set of views and values, potentially moving to another generation with a different set of priorities and values as well.

PHILIPPA: Yeah, but largely in the same geographical area as well of the world.

NIAZ: Exactly. I’ve heard the term ‘inheritocracy’ be used quite a lot. And historically, I guess, like when I was sort of growing up, our parents and mentors told us to just go and get good jobs -

PHILIPPA: yeah -

NIAZ: with high wages. And me and my friends, we’ve been privileged enough to like sort of achieve those jobs and jump through those hoops.

PHILIPPA: But well, you worked for them -

NIAZ: yeah, of course, but you sort of haven’t received the benefits that you were, that you were sold at the start -

PHILIPPA: yes -

NIAZ: of that, of that journey. And funnily enough, now I guess like over 10 years into my career, I’m seeing people, friends, that I know who’ve been able to be a lot more, I don’t know if ‘free’ is the word, with career choices because they’re aware of inheritances are coming down the line.

PHILIPPA: So they have expectations, right?

NIAZ: Yeah. Whereas historically it would’ve been you -  much more, or at least on the surface level, much more meritocratic. So that you work really hard to get [a] high income to save money to then have a good life.

PHILIPPA: Yeah.

NIAZ: Whereas now it’s, I know that I’m coming into this money eventually, so it doesn’t matter how much money I make now. It sort of really changes. 

PHILIPPA: Yeah, you can see how it could change aspiration as well, can’t you?

ANNALIESE: It changes the mindset. Yeah, doesn’t it?

NIAZ: Yeah, for sure.

PHILIPPA: Because Annaliese, you’re all about advising people, you know, for looking ahead, but this wealth, assuming people don’t just blow it, is going to trickle down to subsequent generations as well, isn’t it? So it’s not just a now thing.

ANNALIESE: Yeah, it’s going to have a trickle-down effect. I’d not heard of the term ‘inheritocracy’. Have I said that right? I thought it was really interesting, but I’ve seen it in practice at work when we’ve had sort of large trust funds that are going to children. So it might be that the first firm I worked for, we’ve managed trust funds. And I’ve seen it where children have inherited at 18 [years old], blown the lot.

NIAZ: Wow.

PHILIPPA: Have you really?

ANNALIESE: Absolutely. Yeah. Like blown through it in like a year. So there’s this whole debate as to if you’ve got a trust fund, do you sort of prepare the child for it? There’s always going to be this end date for it. Or you could have what’s called a discretionary trust where it’s - there’s no end point to it, but it’s that whole weighing up, “OK, do we give the child the money at 18, 21, 25, and then they can use it, buy a property, whatever, or is it in a trust with no potential end date?”. It’s that balancing act.

Inheritance Tax (IHT) basics and thresholds

PHILIPPA: We should start with the nuts and bolts of this because tax is the thought in my head. You know, if we’re thinking about planning for this wealth transfer, Annaliese, this is your area. Can you, I mean, Inheritance Tax, it’s a big subject -

ANNALIESE: it is -

PHILIPPA: but can you give us the basics?

ANNALIESE: My favourite quote when I’m talking to clients is Benjamin Franklin, where he basically says, you know, “There’s two things in life [that] are certain, death and taxes”. I get clients coming into the office and one thing they’re really obsessed with is ‘death duties’. They still call it death duties even though it’s not been called death duties for many, many years.

PHILIPPA: OK, yes, so just for the avoidance of doubt, that’s the same thing.

ANNALIESE: It’s the same thing, yep. So it’s actually introduced in 1694 according to my research.

PHILIPPA: Wow.

ANNALIESE: So it’s not a new thing, and you had to pay it when your estate was over £20. So thankfully the threshold’s a bit higher now, but not much. Basically what you need to know is that Inheritance Tax is a tax on a [person’s estate]. Your estate is property, money, possession, and what we call potentially exempt transfers, which you make within seven years of death. And you have to remember that not all estates are taxable. It’s only if it’s over £325,000.

PHILIPPA: Yeah, this is important to say because obviously, you don’t pay Inheritance Tax until you inherit more than £325,000. That’s right, isn’t it? So the rate is high, isn’t it?

ANNALIESE: It is. So it’s 40% [on] anything over £325,000.

PHILIPPA: A big, big tax.

ANNALIESE: But there’s lots of allowances [that] are available. So quite often it can be that although on paper an estate looks like it might pay tax, once you’ve taken into account the nil rate band of £325,000 and you’ve got now the residence nil rate band of £175,000, it might be for most people actually it’s not going to be an issue.

NIAZ: Is that in addition to the £325,000?

ANNALIESE: It is, yeah. But the thing is, I guess what happened in 2017, so everybody focuses on the whole, “Oh, it’s £1 million, you can give £1 million away tax-free”. But you’ve got to bear in mind that’s where you’ve got a married couple or a couple who are in a civil partnership, so that’s their two lots of £325,000, and that’s two lots of £175,000 for the residence nil rate band. But on paper it can look like, “Oh great, yeah, I’ve got £1 million tax-free”, but you’ve got to remember the money, the residence nil rate band, can only be used against property. So you have to have a property that’s worth at least £350,000.

PHILIPPA: Well, and that brings us to the key point, doesn’t it? Because I mean, anyone take a guess at the average UK property price now?

DAN: It’s under £300,000?

ANNALIESE: Yes.

PHILIPPA: Yeah, Dan nails it at £270,000. Well, yeah, in January [2026] I think it was £270,000. Numbers vary, but between that, somewhere between that and £300,000. So that’s the average for the whole country. You’re nearly at that point where you’re paying Inheritance Tax already, aren’t you?

ANNALIESE: Yeah.

PHILIPPA: So it used to be, well, I suppose my sense was that only people with big estates paid Inheritance Tax, but not anymore. It feels quite low?

ANNALIESE: It is. I mean, until the 2009 tax year, it actually used to increase each year. So in April it would go up. So it’s been frozen since, oh gosh, it’s been frozen since the 2009/10 tax year at £325,000, and it’ll stay at that level until 2030/31. So it's like 22 years, which -

PHILIPPA: 22 years with all the inflation that we’ll see in 22 years. That’s amazing, isn’t it? Something that’s so far, far more people are going to be caught by Inheritance Tax than they ever used to be.

ANNALIESE: Yes.

PHILIPPA: What should the number be?

ANNALIESE: So it should be more like £535,000, which is a huge difference.

PHILIPPA: It is, isn’t it? Because if we’re saying that, you know, the average house price is under £300,000, then that gives you quite a lot of wriggle room with your estate, doesn’t it, for other investments and savings and belongings and all the rest of it to be part of your estate before you’d have to pay any Inheritance Tax.

ANNALIESE: And I think it's something that sneaks up on people as well. They don't appreciate how much their property’s worth.

Wills matter, even when young

PHILIPPA: So Dan, I mentioned at the top that, you know, what counts towards your estate at the moment, pensions don’t, but from April next year, they will.

DAN: Yeah.

PHILIPPA: So talk us through that. How’s that going to work?

DAN: It’ll mean - it’ll be very big, actually. So people’s biggest financial assets are their house and their pension. So that’s most likely going to tip people over that £325,000 [threshold]. And I imagine there’s going to be a lot of big Inheritance Tax bills because some people’s pensions might be worth that [£325,000] already. So combining that with their property value as well as other assets is going to be quite a big deal. So people probably do need to plan and have conversations and get ready for April 2027.

PHILIPPA: And talking of things that people like to kick down the road, Annaliese - wills.

ANNALIESE: Oh!

PHILIPPA: It’s important to have one, particularly in this context -

ANNALIESE: oh, absolutely.

PHILIPPA: I mean, obviously generally it’s important to have one, but because things can get really complicated if you don’t.

ANNALIESE: It can be. So I think, you know, it’s rare that I get younger - I’m sorry, I feel so old!

DAN: I’ll take younger!

ANNALIESE: Do you have a will?

PHILIPPA: She’s looking at Dan.

ANNALIESE: I feel so old. Do you have a will? I’m putting you on the spot.

DAN: I don’t have a will -

ALL: [Gasps]

DAN: yet. Yeah, I’ll caveat and say yet -

PHILIPPA: and you bought a property and you don’t have a will? Yeah, so we’re all shocked around the table.

DAN: We’re in the process of upsizing, but we’ve said, my wife and I, that once we, once we bought the place and once we have had kids, which hopefully will be the next one-to-two years.

ANNALIESE: I’ve heard this so many times!

PHILIPPA: For people [who] aren’t watching this series [on YouTube], Annaliese is literally clutching her head. Yeah. Tell them why that’s a bad idea, Annaliese.

ANNALIESE: Oh my goodness. Oh, the amount of times I hear that. It’s - I’ll get people coming in the office saying, “Oh, we’ve been meaning to make a will since we had the kids”. And you’ll say, “Oh, how old are the kids?” “30”. OK, right.

I think, you know, I’ve been in practice quite a long time now, which makes me feel terribly old. I guess in my early days of doing the work I do, it was like families were very typical. You had Mum, Dad, kids. Whereas now you’re on to remarriage, marriages, or people have been together an awfully long time and have children.

PHILIPPA: Or people not married with kids.

ANNALIESE: Yeah, it’s just, you know, the potential for things to go wrong is, is just so huge. And I think people think wills are expensive, but I think there are - there are - of course I think they’re a good thing to have, but it’s - if you make a will, you’re, you’re deciding what happens to what you’ve got. It’s important to have a will just to make sure, well, from a tax planning point of view, because [there] might be things you can do in your will to structure stuff to be more tax effective.

[There] can be reasons you want to exclude people in your will, for example. It could be you want to put trusts in your will because it might have children who have a disability and you want to make sure that they’re provided for, but you can’t give money to them directly.

NIAZ: I always hear that it’s like giving you ‘agency insurance’ rather than having the government decide for you and step in.

ANNALIESE: Yes. Yeah, ‘intestacy’ can be really unfair.

NIAZ: I’ve been meaning to - I’ve actually been sitting here quietly and letting you take the heat, but I’ve been meaning to -

PHILIPPA: you’re kidding me?

DAN: You don’t have one either?

NIAZ: I’ve been meaning to have my will written for the last 18 months -

PHILIPPA: Annaliese, I’ve been feeling really smug, because I’ve had a will since my 20s.

ANNALIESE: Excellent!

NIAZ: I’m meaning to have my will written… before I die.

PHILIPPA: I can’t believe you.

NIAZ: Annaliese, maybe I’ll come to you straight afterwards.

Estate planning conversations create clarity

PHILIPPA: So your Dad didn’t have one for a long time, did he?

DAN: My Dad didn’t have a will for ages, and it wasn’t until my Mum passed in 2021 where I said, “Oh, what’s, what’s the situation with yours?”. He was like, “I don’t have one”. And my Dad’s very laid back. He’s so laid back, he’s basically diagonal. And we sat down and said, “OK, well, your house is near the threshold we need to plan for it, because in an ‘X’ amount of years it might go over, so we need to have something written down”. And I’ve got two older siblings, and my Dad originally said, “Oh, in the will I’ll just leave everything to you, and you can divvy it up three ways”.

PHILIPPA: Oh wow, no pressure.

ANNALIESE: Oh no!

DAN: Absolutely not. So that’s not what happened and we’re all in that. And he does - it’s literally just his house, which he said, “Oh, once I’ve gone, sell the house and split it three ways”. There [are] no massive antiques or paintings or anything like that.

NIAZ: If you don’t [mind] - so my Mum also passed in 2021, and I remember they just got - my parents came and told me that they just got their wills done a few years before, and that sort of like sprung it to mind at the time because I think it meant that my Mum’s portion, that you mentioned earlier and her allowances, were passed to my Dad, and it saved - because it was fairly premature in terms of my Mum’s passing, but it sort of forces you to realise that you can never be too prepared.

PHILIPPA: So, OK, so ‘need-to-knows’. A will, because A. It’s a good idea, right? And [B.] also getting back to this, you know, transfer of wealth it means you can plan, right, Annaliese?

ANNALIESE: Absolutely. So I mean, the thing is with a will, it’s again, as you were saying, agency, tax planning, clarity, because I think when it’s when people are second-guessing and things like that, a will makes it absolutely crystal clear, this is what you want. Even if you make a straightforward will and you’re just leaving everything to your partner or to the children or whatever, it just makes it - a simple will can create clarity.

A will can be as easy or as difficult as you want to make it. Most clients will come in, and they’ve got the weight of the world on their shoulders, and they’ve put off making a will because they think that their family setup is complicated or their finances are complicated or whatever. But actually, when you sit and unpick it, a lot of the time it’s really quite straightforward. It just needs somebody on the outside going, “Actually, it’s not that bad, we can deal with this”.

PHILIPPA: There’s a lot of emotional resistance to people making wills as well -

ANNALIESE: oh, totally -

PHILIPPA: because they think somehow it’s going to hasten their death.

ANNALIESE: Well, we were saying this earlier!

Gifting rules and pitfalls

PHILIPPA: So we’ve talked about wills. What we haven’t really talked about is gifts in life, when people are still alive. So, Annaliese, how - I mean, can parents just give money to their kids?

ANNALIESE: You can do whatever you want. You could - you know, if you, if you want to give it to the kids or whatever, that's absolutely fine, but you’ve got to remember that potentially it can come back and haunt you a little bit. So you’ve got your annual allowance of £3,000 per year, and then you’ve got gifts of £250 that you can give to people not part of the people that you gave your £3,000 to. Anything over that you need to keep a record of, because if you survive for seven years after making a larger gift, it’ll drop out of your estate from an IHT point of view.

PHILIPPA: So you can hand over a really seriously large sum of money, and as long as you survive for seven years, there’s no tax liability -

ANNALIESE: and no strings attached to it as well. So it’s got to be a true gift. So it’s going to - it can’t just be a gift on the surface, it’s going to be a true gift. So it’s “Here you go, here’s £50,000, see you later”.

PHILIPPA: So you can’t give your kids the house and say, but, but I want to live in it until I die.

ANNALIESE: So that’s what we call a gift with reservation of benefit. So it’s - it’s a gift on the surface, but it’s not really. So that can come back into your estate. Another thing that can catch people out as well is that if you give [your] children a deposit for the house, or you then go and live with them, it can come back as a gift with a reservation of benefit because it was a gift to start with, but now you’re benefiting from it because you’re living in the house.

PHILIPPA: Who knew?

ANNALIESE: So that’s a little quirky one that can catch people out.

PHILIPPA: Yeah, I mean, we’re talking about parents, but is there, are there other rules around things like uncles, aunts, godparents? I mean, can anyone pass down money?

ANNALIESE: Yeah. You know, for children you can give up to £5,000, £2,500 if it’s a grandchild or a great-grandchild, and £1,000 to any other person. So that’s your exemption, but you know, if you wanted to give a larger sum of money to people, that’s absolutely fine. You’ve just got to make sure you survive the seven years.

PHILIPPA: I could see how - I’m not really in this position, but I can see how handing over like a big sum of money and then thinking, well, OK, it’s gone now, but what then? What if I live another 20, 30 years? What if I need the money?

NIAZ: Is there a way around the seven years? Is there any workaround, or is that the - that’s it?

ANNALIESE: No. Well, you get some relief. So, if you survive for three years after making the gift, then there’s some Inheritance Tax relief.

PHILIPPA: There’s a taper, isn’t there?

ANNALIESE: Yeah, so the closer you get to seven years, the greater the relief is.

PHILIPPA: So I think what we’re getting from this is [to] take advice.

ANNALIESE: Absolutely.

PHILIPPA: Don’t guess, don’t wing it, because - and it doesn’t necessarily need to be expensive, does it?

ANNALIESE: No.

PHILIPPA: I mean, basic - and also good advice on, you know, online, reputable advice online if you don’t want to pay someone immediately to get advice. But you don’t want to just guess, do you Annaliese?

ANNALIESE: No.

When family dynamics and money collide

PHILIPPA: I tell you what I’m also wondering about this wealth transfer. I mean, it all sounds great, doesn’t it? But I am wondering how it’s going to affect family relationships, because there’s nothing that disrupts goodwill in families like money, is there? We all know this, sad but true. And how it’s shared out is going to be a whole thing, isn’t it, Annaliese? I mean, I bet you’ve come across situations with clients where there’s been a lot of strife.

ANNALIESE: So it can be if [a] child’s received money in their lifetime, then the parents might do something in their wills to try and level things out because they want to be fair. Or like, there can be uncomfortable situations where people have gifted property and then people fall out and it’s, “I’ve given them my property, I’m still living in it, but things are really uncomfortable now because we’re not speaking”.

PHILIPPA: But there’s a question about how you divide up. I mean, if you’ve got a bunch of kids, we’re talking about parents and kids, and the kids are grown up and some of them are earning more than others, or maybe some of the married partners who’re earning more than others.

And as time goes on, we’ve all seen this, like you get this gap growing up between siblings, you know, the ones who [are] really very comfortable, and maybe the ones who’ve gone into jobs that aren’t high-paying, but are rewarding in other ways. There’s a big gap there. So should parents means test it?

ANNALIESE: Oooh!

PHILIPPA: If I put it that way, when it comes to passing down money? I mean, if you’ve got a really wealthy child, do they need your money as much as someone working, I don’t know, in the NHS on a lower salary? I mean, what do we think?

ANNALIESE: I think the value that I can add as a Solicitor is, we’re on the outside looking in, so we can remove the emotion out of it. Most of the time clients will go, right, “OK, we’ll just do an equal division”. And it might be the child themselves has removed themselves out of it, going “Do you know what, actually I’m doing OK, leave me out of it”. Or it might be they say, “Skip me because if I get anything from you, it’s actually going to cause me an Inheritance Tax issue. So [a] generation skip and stuff like that and go to my children instead”.

PHILIPPA: So there’s no one-size-fits-all, because certainly as people get older with, you know, a bunch of kids, there’s usually one who’s sorting out the elder care, isn’t there? There’s usually one who’s -

DAN: yeah.

PHILIPPA: And I’ve done this too, and that can be a lot of work and expense, can’t it? You can’t think - well, in fairness terms, they should probably, you know, that can be years and years of input, can’t it?

DAN: Yeah, so my siblings, they’re both older than me, so they’re in their early to mid-40s and I’m in my late 20s. And I’ve always been interested in finance and like learning how to make your money work for you, whereas they haven’t been as interested. So I said to them both “I’m going to set Dad’s will up”. I’ve talked them through it, so they know it’s not going to be a case of like it’s only just me in it.

ANNALIESE: Yeah, so there’s no surprises.

DAN: Yeah, so they know what’s happening. But I think sometimes there are like siblings that’ll take a lead on it, and sometimes you might have people that will be more involved, and it’s split.

NIAZ: And you always feel like the old grievances pop up, as we were saying earlier, like when someone’s not here to sort of hold everyone at bay, you see the grievances pop up again and you wonder like, “Where has this come from?”. And, sort of the inheritance becomes like the means to fight over all of that.

PHILIPPA: Oh yeah, so this isn’t very positive, but should we wrap up?

ANNALIESE: Which is why you should make a will. There’s that.

PHILIPPA: Well, yeah, I was going to say, should we wrap this up. Things listeners could maybe think about doing right now. What would be useful steps for them to take?

NIAZ: I think making the will, which I’m going to be speaking to Annaliese about. So I think that’s really important. And then I think the other thing is to try and step, for me, I found step beyond the awkwardness of certain conversations. As you said at the start, Annaliese, death and taxes are the two things that you can’t avoid. So I think to get comfortable as quickly as possible to have conversations about these things will probably help for longer-term financial and estate planning.

PHILIPPA: So if you’re siblings and you know there’s money in the family, even if it’s not a huge amount, maybe that’s the thing, be bold enough to start the conversation?

DAN: Yeah, probably the first step’s the trickiest, but I think one thing I’ve taken is you can have a will at any age and it’s very important.

ANNALIESE: Excellent. I think what I’d say is that you need to plan actively, otherwise you can risk sort of accidental disinheritance of family members, stepchildren and things like that. So yeah, I’d say that the takeaway would be to talk early, plan clearly, structure wisely, and review regularly.

PHILIPPA: Yeah, and it doesn’t have to be one conversation, does it? Because I think people dread it because they think it’s going to be like everyone sitting around the table staring at each other. It’s going to be this one conversation where it’s like make or break. But actually it’s a series of conversations.

ANNALIESE: It can be a drip drip, you know, plant the idea and then go back to it.

PHILIPPA: That’s a whole other conversation. I think we’re about there. Thank you very much, everyone. Thank you.

ANNALIESE: Thank you.

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