Psychological Aspects of Legacy Planning

Psychology of Legacy Planning

OK, this article would be better headed, ‘In your 30 years’ experience of dealing with wealthy, often entitled people, what are the most common Legacy Planning hurdles you have to overcome?’

Sadly, that snappy title doesn’t get rated for SEO purposes, and we have to play their game.!

The author is not a trained Psychologist. Then again, not too many psychologists spent their last 30 years deep in conversations with wealthy, older people, coming to terms with their mortality, and their ‘kids vs taxman’ conundrum..

If you don’t plan for Inheritance Tax, here’s what happens

Let’s leap right in

The very day you draw your last breath, the tax authority starts the clock and, just 6 months later, the day dawns when your family must pay the Inheritance Tax due on your estate. It’s been that way for hundreds of years

It is the very last opportunity HMRC will get to tax you, and they ain’t gonna miss out!

How easy is it to plan for Inheritance Tax.?

How much Inheritance Tax will my family have to pay

In a word, simple, if you know what you’re doing, and you’re motivated

First and foremost, you’re not planning to avoid Inheritance Tax!

What you are seeking to do, well in advance of your demise, is arrange your family legacy so that no Inheritance Tax is due when you die. Nobody, anywhere, disputes that to do so, properly, is entirely legal

The process is not difficult, so let’s consider it for a moment..

You know there will be death duties when you die. You know that, without planning, HMRC will confiscate 40% of everything you worked for, after just a few allowances and exemptions. You know the value of your family estate. So, by definition, you know the size of the problem!

Everything, and I mean everything in the process, is entirely predictable, except when you will die, of course

Your kids need you to accept that, men are from earth, women are from earth, we’re all going to die, so get over it, and get on with legacy planning, for their sakes..

What happens if you don’t plan?

Your family will have the difficult task of sorting out the mess you left behind

If you own property, or some types of shares, your family will need to obtain probate, and 40% Inheritance Tax may be due and payable, just a few weeks after you’ve gone

So, focus on how they’re going to pay the tax bill.?

Help with telling your kids if you can’t be arsed to plan for their legacy

This might work:

Invite your kids, and their partners, over to yours for a get together, perhaps over a nice family meal. Maintain the small talk ‘til everyone’s finished eating then, when everyone’s in great spirits, ask for hush, and make your announcement. Here’s the gist of how it may go..

‘Listen up kids, there’s something we need to tell you

Your Mum and I have worked all our lives and, as you know, we’ve done pretty well

Remember all those long hours we worked, all the times when we had to put the business first..

Well, here’s the thing, we’ve decided we just can’t be arsed to plan to pass our legacy to you kids so, when we die, we’re leaving 40% of everything, to the taxman, and we’ve decided HMRC’s going to be the biggest beneficiary of our lifetime’s work..’

(Tip: keep talking, don’t pause, don’t look your kids in the eyes, and duck as necessary! – then continue..)

‘Don’t worry though, all of you, our 6 children, will get 10% each

If any of you can’t pay the Inheritance Tax, you can always make some fire-sales of the properties, or liquidate the family business, or take out a ten year ‘mortgage’ with the Tax Authority. Right now, the rate of interest is just 7.75%!

Don’t forget, Mum and I were the brains of the business, but we won’t be around to help you sort this mess, because we’ll both be dead..

OK, that’s it from me, here’s your Mum to answer any questions.?’

Everything is just borrowed anyway

Most people seem to spend their lives seeking the worldly things – possessions, looks, money, and power – because they appear to believe that’s the path to fulfilment

Well, reality check time; they’re all just props

When you check-out of this life, and check-out you surely will, you have to give them all back to the great prop-master in the sky

They’re just on loan

They are not yours, but there are ways you can extend the loan.!

So, how do YOU go about it?

Psychological aspects of legacy planning

Well, genetics dictates you already passed on your ‘looks’ to your kids, and they’re stuck with those. Here’s hoping that was a good thing

That leaves ‘possessions, money and power’, which means your Family Legacy

You can plan ahead, to tax-efficiently pass your Family Legacy to your children, and it is entirely legal to do so, provided you follow all the rules and regulations, of course

How do you get started

Start by being brutally honest about your mindset. Decide what you really must keep, think about income requirements, and life’s ‘what-ifs’. Provide for those, and consider giving everything else to the next generation of your family

If you decide to hold on to everything until you and your spouse both die then, invite your family around and tell ‘em you just can’t be arsed to plan! You’ve already seen how you might do that

It’s worth remembering that your mindset is just the way you’ve learned to do things over the years. It’s just one way of thinking. It’s not right, it’s not wrong either, it’s just your way. You can easily change your mindset, and your family might be the reason why you should

Control vs Ownership

Most often, the real issue is control, not ownership. Well, know this – you don’t have to own things to control them! It does NOT mean you have to give up everything, or even significant control

For example, it is possible, even with a minority interest, to retain control through a partnership, or shareholder agreement, and company Articles

It’s usually possible to give things away, and still control them. You just have to know how

The correlation between discussing your mortality, and tempting fate

Let’s get this out there, right now, and with no sugar-coating. There is absolutely no correlation whatsoever between talking about what happens when you die, and actually dying

Nothing bad is going to happen if you stop thinking solely about yourself, and start planning for your family and loved ones

YOU must take action, and you need help from professionals. If you’re looking for the kind of solution where your God reaches down, and touches you with a magic wand, and all of a sudden your Legacy Planning is fixed, then you may need more help than we can provide..

When is the best time to plan for the future of your lifetime’s work.?

Here’s Scott’s real-life story. It’s enabled us to help others over the years, and it may help you too:

Soon after Scott’s late wife, Rhona, was diagnosed with terminal cancer, her wise old Oncologist, just weeks before his retirement, took Scott aside and said ‘Watch her carefully right now, because she’s teaching you how to live’

His many years of dealing with end-of-life conversations led him to conclude that, ‘if we live as if we’re dying, we can bring some real clarity and meaning to life’

Think; ‘dying tomorrow, what shall I do today’, and remember always, one day, there really won’t be a tomorrow! The truth is, we’re all terminal on this bus..

So, get started

‘What is essential, is invisible to the eye’ James Dean

Dying people teach us to pay attention, to forgive, not to sweat the small things, and get important stuff done

So, starting now, get on board with your duty of care to your family, and let’s get started on your Legacy Planning

Next steps

If you’ve really read this article, likely you’ll appreciate that you need specialist Inheritance Tax advice, to properly plan to tax-efficiently pass your life’s work, your Family Legacy, to the next generation of your family

Likely, your existing advisors just aren’t good enough, and you need a faster horse. At very least, you need a second opinion, from specialist Chartered Tax Advisors who do this most every day, of most every week

For help with anything and everything we’ve considered in this article, check out and talk to an Expert for FREE!

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