By Daniel Hough
Anyone watching Succession will recognise that the Roy family depict an extreme version of what can happen when it comes to inheritance – after all, a multi-billion-dollar empire is at stake.
Nevertheless, the bickering and in-fighting that make the show so watchable are not that far from reality for some families when an estate of any size is being divided. If you want to avoid that type of acrimony, there are some steps you can take.
The first would seem straightforward, but often isn’t: set out proper instructions that reflect your wishes.
One of the biggest points of contention about Logan’s will is the pencilled amendments he has made at an unspecified date. Depending on your point of view, the patriarch has either underlined his desire for Kendall to be appointed CEO or ruled him out altogether.
Keeping an accurate set of records for your family and a separate list of assets can also be valuable. These will need updating periodically, say roughly every three years, and certainly ahead of any big life changes – for example, if one of your children gets married or relationships change significantly, as they did between Logan and Kendall.
Both of these steps point to the fact that you need to plan well in advance. Logan’s passing may have come as somewhat of a surprise, but Roman talking about his ‘pre-grieving’ demonstrates the eventuality was not far from anyone’s mind.
Planning inheritance not only manages expectations and removes any potential shocks for your family, but it can also help ensure you make the most of your annual tax-free allowances. Broadly speaking, the earlier you start handing assets down, the better.
When you are doing so, however, you may want to consider how you can ensure everyone feels they have been treated equally.
Perhaps the biggest source of contention in inheritance situations – especially in the Roy’s case – is one or more parties feeling they haven’t received their fair share. It is a particularly thorny issue if there is one large asset in an estate that is illiquid or not easily split.
One of the simpler ways around this can be to earmark a pension fund for a particular member, or members, of the family. Provided it is passed on within two years of death, it will generally not be liable for inheritance tax.
Another option could be to take out a life assurance policy. This will pay out a set amount when you pass away, creating a pot of money that can be earmarked for children who don’t stand to inherit the family home or a similar type of asset.
Setting up a trust is one way of ensuring everyone feels treated equally, while also exercising a degree of control over how and when assets are split between your family.
A discretionary trust is one of the most effective means of protecting assets and providing flexibility, allowing wealth to be held within this structure until the trustees decide it should be distributed.
The trust allows assets to be ringfenced outside of your estate, and provided the initial gift is survived by a period of seven years, it will generally be disregarded for inheritance tax purposes.
Perhaps most importantly, talk to one another. Constructive communication is an important way of avoiding conflict, even if money is a difficult topic to broach. To ensure everyone is on the same page, it can be helpful to talk about the way forward.
This is especially true in cases where there is a specific asset that one child would like to inherit – in this case, a job role. There needs to be a discussion about how the inheritance can be equalised for the other children, if maintaining parity is important.
Ultimately, everyone has to feel able to discuss what they would like and share that with the other members of their family for their expectations to be aligned.
So, the best thing you can do is to sit down and start having these conversations with your loved ones now – no matter what stage of life you’re at.
Daniel Hough is a financial planner at RBC Brewin Dolphin
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