One part of the Altor service is organising wills and LPAs for our clients, but just as important is reviewing the ones they already have. We often see errors and issues with existing wills, and we will summarise this elsewhere. For today’s blog we wanted to talk about a nice intention that we often see in wills, but that can be dealt with better.
Over the many years of advising clients, we often see small legacies left in wills. These are typically nice gestures leaving small sums to grandchildren, godchildren, friends, carers and even in one case a long-standing housekeeper.
The first issue with this sort of legacy is that they are often fixed amounts that erode in value over time. So that £1,000 legacy left 15 years ago, isn’t now as generous as originally intended. This sort of problem can be addressed in a couple of ways. Firstly, you can invest that sum now in a designated amount within your own investment portfolio, so that the ‘real’ value after inflation is maintained. The second fix is to leave your estate to a simple discretionary trust and keep an up-to-date letter of wishes to your trustees.
We are currently maintaining both designated accounts and letter of wishes for existing clients. Often, we find that other advisers have talked clients out of designated accounts as it is too much like hard work for the adviser (a laziness we take a dim view of).
The third solution is perhaps the most enjoyable to be involved with and this is to gift these small legacies now. It is sometimes referred to as giving with a warm heart and not a cold hand.
There is actually a lot of joy to be had in being able to gift this money now and the beneficiaries be able to say ‘thank you’ whilst you are still around to hear it. You can also say what you appreciate about the person and why you are making the gift, rather than it being an impersonal cash sum from a solicitor. They can often do with the money now anyway and waiting years until you are gone, might be too late to do the things they want to.
Affordability often prevents clients from making gifts earlier in life, but these are typically not large gifts that are going to change someone’s long-term cashflow. A second objection to giving is often that the beneficiary isn’t ready to receive it and may waste it. With family who stand to receive larger amounts later on from your will, giving them a small amount of money now is probably a good test to see whether they can cope with a larger amount later on.
This is probably best summed up by the message we received from a client recently who has just finished this process with his beneficiaries:
“I am extremely grateful to you for advising me to pass on my legacies to my grandchildren and godchildren in my lifetime. This gave me a wonderful experience which I would have been denied had the legacies had been passed on after my death. It gave me so much pleasure when they expressed their joy, surprise and gratitude and explained how they were going to spend the money to fulfil ambitions which they had cherished such as visiting countries on their bucket lists or making improvements to their property.”
– Altor client