Elderly relative asking for advice

DiamondLil

There is a lot of sensible advice here, but it is not so easy to change the habits of a lifetime; your relative was brought up to live frugally by frugal family.

Just as there are folk who spend their lives in debt, servicing the debt minimally, living from payday to payday, there are those who, for one reason or another, have spent their entire lives not spending any more than is absolutely necessary.

It is as alien to them to spend money as not borrowing to buy a new car, bigger house, latest gadgets etc. is to the debtors.

@artyboy - all you can do is gently and persistently work, firstly, on getting the relative to sort out a will and then take it from there with the other stuff.

Voyager2002

My suggestion: find out what would happen if the intestacy rules were applied, including how much would (needlessly) be paid in tax, court fees and other expenses. Quite probably this would be significantly different from what your relative wants: for a start there would not be any charitable donations (which can be a very tax-efficient way to support charities). Possibly the contrast between this, and what he wants to happen, might be enough to spur him to take some kind of action.

The same remarks apply to getting LPAs in place: let him know what is likely to happen if this is not done. 

artyboy

So... firstly thank you all for your comments and suggestions. Very much appreciated. It certainly confirms my own thinking that there's no silver bullet approach here...

Tucosalamanca said:

I'm in a very similar situation, although my 75yr old relative has a far smaller pot (but enough to be in the realms of cgt).

I have encouraged them to spend it.
Buy a new bigger TV because it would enhance their life, do all the home improvements they would like, don't be afraid to take taxis (they no longer drive and walk/bus everywhere), pay for private medical care, pamper themselves, be generous to people around them (because they could see it benefiting their loved ones, who are at the time in their lives where any contributions would be very helpful). They always find an excuse not to holiday.

I've gone over finances. Shown them what they have, how much it earns, their income, how much they could spend each year for the rest of their lives and so on.

I've shown the benefits of spending / gifting now versus the consequences of doing nothing. I've reassured them that it's virtually impossible for them to run out of money.

They have asked for advice over a number of years but seldom act on it.
They choose inaction rather than taking charge or delegating.

I understand that they have a will but they have no LPAs in place.
I've encouraged a visit to the solicitors for years and often give little reminders but it's always on the 'to do list'. Short of booking a solicitors appointment and physically driving them there, I can't do anymore.
They are in relatively good health and have full control of their faculties. I don't think it's proper that I push them any further.

I don't know if it's not trusting anyone, if it's fear of dying and unable to talk about it or fear of losing everything.
It could be that they feel keeping wealth gives them some power over loved ones (and they don't want to lose it).
It could even be that they're unwilling to part with previous inheritances, for whatever reasons.

I do know that as the 'responsible one' at some point I'll be dealing with the consequences.

I can't offer any advice but can empathise with your situation.

Wills are important but not essential. Planning to avoid CGT is a good idea but ultimately it's only money

I'd say the LPA's are the most pressing issue. If something happens and they really need help, LPAs will make life so much easier.

I hope it works out for you and also look forward to other people's replies.

Thank you, and I should have mentioned it, but yes, LPA is very much on the cards for discussion already. I don't think there is much resistance to this in principle, just inertia in practice...

katejo said:

Tucosalamanca said:

I'm in a very similar situation, although my 75yr old relative has a far smaller pot (but enough to be in the realms of cgt).

I have encouraged them to spend it.
Buy a new bigger TV because it would enhance their life, do all the home improvements they would like, don't be afraid to take taxis (they no longer drive and walk/bus everywhere), pay for private medical care, pamper themselves, be generous to people around them (because they could see it benefiting their loved ones, who are at the time in their lives where any contributions would be very helpful). They always find an excuse not to holiday.

I've gone over finances. Shown them what they have, how much it earns, their income, how much they could spend each year for the rest of their lives and so on.

I've shown the benefits of spending / gifting now versus the consequences of doing nothing. I've reassured them that it's virtually impossible for them to run out of money.

They have asked for advice over a number of years but seldom act on it.
They choose inaction rather than taking charge or delegating.

I understand that they have a will but they have no LPAs in place.
I've encouraged a visit to the solicitors for years and often give little reminders but it's always on the 'to do list'. Short of booking a solicitors appointment and physically driving them there, I can't do anymore.
They are in relatively good health and have full control of their faculties. I don't think it's proper that I push them any further.

I don't know if it's not trusting anyone, if it's fear of dying and unable to talk about it or fear of losing everything.
It could be that they feel keeping wealth gives them some power over loved ones (and they don't want to lose it).
It could even be that they're unwilling to part with previous inheritances, for whatever reasons.

I do know that as the 'responsible one' at some point I'll be dealing with the consequences.

I can't offer any advice but can empathise with your situation.

Wills are important but not essential. Planning to avoid CGT is a good idea but ultimately it's only money

I'd say the LPA's are the most pressing issue. If something happens and they really need help, LPAs will make life so much easier.

I hope it works out for you and also look forward to other people's replies.

On a very minor point in this text, I go by public transport or walk since I actually dislike taking cabs so do it as little as possible. While still fit and well, I will carry on that way. I could easily afford an occasional cab but really don't want to.

Yes agreed, and it's interesting that because I used the word 'elderly', there's perhaps been a tendency to interpret this as 'frail' - nothing could be further from
the truth, and I hope/expect them to have another good 10 years in them at least.

redux said:

I think the angles to consider are reduction of inheritance tax, possibly by making gifts of part of the estate while still alive, but still keeping enough to get by on, and that maybe in conjunction with use of trusts

I'm not an expert, but I'll draft something to post later 

Yep, very much in my notes - they could happily spend £50k a year and not run out by the end of their actuarially predicted lifespan. It's not my place to try and get them to gift it all, but if they don't gift some of it to who they want, it will end up getting gifted to who they DON'T want (ie HMRC)

Keep_pedalling said:

They really do need a will, and your point about appointing executors is the one to hammer home. Even more important is that they should put LPAs for welfare and finance  in place as a matter of urgency. Being mentally incapacitated though accident or illness is going to cause you a lot more issues than them dying intestate.

With such a large estate they really should be taking professional advice from an IFA.

More chance of nailing a jelly to the ceiling than getting them to pay for financial advice...

Mrs_Z said:

Could you start with getting the LPA in place?  This could then be followed by a will.  You can also get someone to come to the house to do both. What worked for late friend of mine, is that I offered to a) find a suitable professional to do both and b) then booked the date/time suitable for both parties, and then they sorted out the rest between them. Best money ever spent in my view.
If the person is frugal, it is probably impossible to get them to change their ways - I know a few! 
I would however try from a different angle in that, to highlight what the inheritance tax bill would be if they do nothing, and in order to reduce that, get them to gift away money during their lifetime. They may prefer to give some money away rather than it going to the Crown.
 This way, they would get the joy seeing how their gift makes a difference to someone of their choosing and be secure in the knowledge that the money has gone to a person/charity that is close to their heart.

Yes this is exactly the approach. I'm not going to easily make them divest assets, better to set out the alternative if they don't.  Ultimately it's their call.

xylophone said:

I would strongly suggest that you sit down quietly with your relative and discuss his financial situation and his plans for the future.

If he is agreeable, ask him to give you details of his position.

Ask if he is entirely happy with his home or if there are improvements or alterations that would "future proof" the property and make it comfortable should he become less able as the years advance.

Otherwise, would he wish to consider a house move.

Is there any major purchase that he would like to make?

His estate is large and as there appears to be no child to inherit his house, the IHT will be high.

He might wish to consider making gifts now - if so, he should keep a careful record for the sake of those who will administer his estate.

Check on local solicitors and ask whether he would consider making an appointment with a view to making a will and naming his executors.

This is really important if those left behind to cope are not financially savvy.

He could name the solicitors as default exors  if necessary.

Possibly I wasn't clear but I'm only having this discussion explicitly at their instigation and already with full details of their accounts - of which there are so VERY many of them. It's an executor's nightmare, or rather it would be if there was a will naming an executor...

artyboy

DiamondLil said:

There is a lot of sensible advice here, but it is not so easy to change the habits of a lifetime; your relative was brought up to live frugally by frugal family.

Just as there are folk who spend their lives in debt, servicing the debt minimally, living from payday to payday, there are those who, for one reason or another, have spent their entire lives not spending any more than is absolutely necessary.

It is as alien to them to spend money as not borrowing to buy a new car, bigger house, latest gadgets etc. is to the debtors.

@artyboy - all you can do is gently and persistently work, firstly, on getting the relative to sort out a will and then take it from there with the other stuff.

I suspect this could be the first of many conversations, but I agree, the tack will be "this is what is going to happen if you do nothing" and see what reaction it provokes. As I said in my OP, all I can really do is help them marshal their own thoughts.

Voyager2002 said:

My suggestion: find out what would happen if the intestacy rules were applied, including how much would (needlessly) be paid in tax, court fees and other expenses. Quite probably this would be significantly different from what your relative wants: for a start there would not be any charitable donations (which can be a very tax-efficient way to support charities). Possibly the contrast between this, and what he wants to happen, might be enough to spur him to take some kind of action.

The same remarks apply to getting LPAs in place: let him know what is likely to happen if this is not done. 

Yep, 100%. On the plus side, I don't have what I would consider a lot of grasping rapacious relatives, but you never know what can happen when someone dies and there's a million quid up for grabs. Perhaps I just tell them to read the horror stories on the deaths wills and probate board...

artyboy

thegreenone said:

My late Mum's solicitor did a home visit when she wanted to amend her Will and start LPA.  Could you find out if any locally offer this service?  It might put your relative 'on the spot'............ but they may find being in their own surroundings more comfortable.

Appreciate the suggestion but this isn't someone that is ever uncomfortable going anywhere at all, will of steel, just no real plan, and conflicting emotions. Someone coming round for a cup of tea and a chat would just seem patronising!

Choirgrl

If your relatives siblings were to inherit under the intestacy rules then presumably there’s a possibility of two lots of inheritance tax - one when your relative dies and then another when the sibling does. Might that be an incentive for your relative to make gifts during their lifetime, or to put in place a Will that makes gifts to the next generation(s)? (I appreciate that maybe a tricky conversation to navigate if you’re part of that group.)

Also, leaving 10%+ of their net estate to charity would reduce the IHT rate due on the amount subject to tax to 36% rather than 40%, as well as the charitable legacies themselves being exempt from IHT. 

If their main resistance to making a Will is the cost, there’s a strong case to demonstrate that it will actually save money compared to not having one. If the reluctance is more emotionally based it could be trickier. Hopefully the fact that they’ve asked for your help indicates that it’s more the former than the latter.

TheBanker

Choirgrl said:

If their main resistance to making a Will is the cost, there’s a strong case to demonstrate that it will actually save money compared to not having one. If the reluctance is more emotionally based it could be trickier. Hopefully the fact that they’ve asked for your help indicates that it’s more the former than the latter.

If the main resistance is cost, then is it worth looking at the free solicitor wills that some charities offer? I suspect this situation may be a bit too complex to deal with for free in return for a charity donation, but just starting a conversation with a solicitor about the impacts of IHT and how it can be mitigated might be helpful.

After my dad died, I had to have this conversation with my mum. Her estate won't have any IHT problems, but my dad died without a will so everything went to my mum. From this, she made gifts to me, my sister, her two grandchildren (who are my niece and nephew), my cousin (who was not a blood relative of my dad but had fallen on hard times), a family friend who had been very kind while dad was ill and two charities that dad supported. There were also a number of items of sentimental/family history value that she passed to me and my sister. I explained that under law the estate would be distributed 50/50 between me and my sister, and although we would probably make provision for the grandchildren, we did not know her wishes.

Eventually I managed to establish that it was not the thought of writing a will that worried my mum. It was the fact that I own a house, have a very well paid job and substantial savings. My sister works a minimum wage job, lives in a rented house, has hardly any savings, no significant pension arrangements, and also has two kids to support. Mum said her wish would be to leave my sister sufficient funds to have more security and also to put something in trust for the grandchildren, which would mean I'd receive less than 50%. She thought this would upset me. I said it would upset me more having to deal with her estate without any instructions, knowing that what me and my sister decided may not actually be what she would have wanted. We might pick the wrong charities to support, or miss out old friends who mum would like to receive something. She does now have a will. I will receive less than my 50% share. My sister and her kids collectively will receive more than 50%. I am completely happy with this because I know the money will go to where it's needed most but more importantly I know that what I do receive is what mum wanted me to have and enjoy spending, rather than just the default allocation under law. 

boingy

It's good that they have asked for advice. It would be helpful to know what has prompted them to seek that advice. Are they being nagged by other family members or are they worried that the taxman will take a big slice of the estate or something else?

It's clear that they are not going to spend significant chunks of money on themselves or their house so cross that off the list.

For me, their best and simplest option to reduce the taxman's slice is to give away some of the money and then live long enough for those gifts to not be taxable. But I've seen cases before where people don't want to give money away because they don't want to look flash or look like they have too much money or to draw attention to themselves.

But it may be that all you need to do is show them a rough calculation of what would happen to the money if they died tomorrow, complete with the tax bill, and ask them if they are happy with that. It may be that they consider that the remaining money distribution is generous enough. That's their choice, even if some of us don't think it is the best one. 

So, yeah, it would be great if they made a will and had LPAs and all that stuff but maybe they just want a better understanding of where the money will go if they choose to do nothing else. 

TheBanker

There is actually nothing wrong with paying tax - ultimately the whole country benefits as it can fund better services or help pay off our national debt. So the person may be completely happy with the government inheriting a large share of their assets - or they may not be. The key thing is making sure they understand what will happen, and that if they're not happy with the 'default' position then this is their opportunity to put other arrangements in place.

artyboy

So anyway... it was a good if very long discussion. No disagreements in principle to any of the suggestions that (IMO) would be helpful to their situation. The complicating factor is that they do not do, and have no wish to do, online management of finances, so I feel like helping them will be like rolling back to the last century. Post and branch accounts only - which, when trying to consolidate dozens of ISAs, is going to be an interesting challenge!

Fortunately I have some time on my hands, and given they are open to help, this could be my pet project for the next few months!