Three talking points for client conversations about life and legacy

Without question, inheritance tax (IHT) represents a huge threat to how most of your clients’ wealth is passed down through to their loved ones. It could also be a huge threat to your business, in terms of your assets under management. But as with most things in life, the threat is also an opportunity. It gives advisers the chance to be truly proactive in this area, by repositioning estate planning to clients in a positive and joyful way.

A legacy is something to be proud of

Perhaps the problem is we usually talk about death in hushed tones. The Romans had a healthier approach, captured in the phrase memento mori, or “remember you will die”. It sounds like a warning, but is a reminder that life is finite, so our legacy matters. If we bring that mindset into estate planning, the conversation becomes far more constructive. It becomes about living well, making meaningful choices and leaving something we can feel proud of, rather than dwelling on death and tax.

The family tree bears fruit

Making clients aware of the need for estate planning is one thing – making them care is another. Encouraging them to draw their family tree can help open up the conversation. Once clients acknowledge that wealth may pass down from parents or parents-in-law with estates worth more than the IHT threshold, it can become easier to introduce the idea that, without careful planning, HMRC becomes an uninvited member of their family tree. The contrast between money going to loved ones or to the Treasury usually prompts clients to think differently.

Making clients aware of the need for estate planning is one thing – making them care is another. Encouraging them to draw their family tree can help open up the conversation. Once clients acknowledge that wealth may pass down from parents or parents-in-law with estates worth more than the IHT threshold, it can become easier to introduce the idea that, without careful planning, HMRC becomes an uninvited member of their family tree. The contrast between money going to loved ones or to the Treasury usually prompts clients to think differently.

Completing the estate planning jigsaw

Once clients see the value of engaging with estate planning, the next step is to show them the wider set of options. Good planning is rarely a single action. It often feels more like a jigsaw.

Spending is usually the first piece, because so many clients have saved carefully for years and need permission to enjoy the money they have worked so hard to build. Gifting is really just an extension of spending. If clients do not need the money and are unlikely to spend it, they can pass it on now and see the joy their gift creates.

A Triple Point, we use Business Relief to complete the jigsaw, either as a large or small piece of the puzzle, depending on client needs. It can fit neatly into a plan for clients who want to retain control of their assets while still reducing a potential IHT bill. The simplicity and the speed of Business Relief are often what resonate. There is a huge psychological difference between the two-year qualifying period for Business Relief and the seven-year wait for gifts or trusts to become fully IHT-exempt. Two birthdays feel much more manageable for clients than seven.

Business Relief offers flexible control

The real power of Business Relief is that it is life-changing planning that does not change the client’s life. It keeps the money accessible should clients ever need it, and also moves it out of the IHT calculation if they do not, subject to the usual allowances. For example, £500,000 placed in a qualifying Business Relief investment could reduce or eliminate a significant IHT bill for loved ones, yet the client’s personal wealth calculation looks largely the same before and after having made the investment.

Of course, the higher risk involved with investing in Business Relief-qualifying investments should be clearly flagged by advisers and understood by clients. But doing nothing carries its own risk. Many people become paralysed when they think about the different options, and that can leave them exposed to an inevitable IHT bill on their estate. Business Relief offers a way through that paralysis. It gives clients the comfort of retaining access, the reassurance of a shorter timeframe to IHT exemption, and the opportunity to achieve the legacy they want without being forced into spending or gifting decisions they perhaps do not feel ready to make.

So, the next time you sit down for an estate planning conversation, try these simple entry points: memento mori helps clients to focus on their life and legacy, the family tree helps them to consider who matters most, and the jigsaw helps them view spending, gifting, trusts and Business Relief as one complete picture. Hold on to those and the conversation becomes simpler, more positive and far more appealing for clients.

Important information

The content of this article is provided for information purposes only and does not constitute financial promotion or investment advice. The views expressed in this article are those of the author and can change at any time. Investor’s capital is at risk. Tax treatment depends on the individual circumstances of the investor and is subject to change. This financial promotion has been issued by Triple Point Administration LLP which is authorised and regulated by the Financial Conduct Authority no. 618187.