I was meeting a friend, but I walked into the coffee shop with a sense of dread. I had not done my homework. But then, it transpired, nor had he. We were both stuck on the “death” question.
Tim is a successful lawyer who was writing my will; I had taken over management of his pension. My wife and I needed to decide who would inherit our assets after our deaths, while he needed to complete a binding death benefit nomination form.
It is the sort of homework that advisers, like us, give out to clients every day.
But neither of us had been able to confront the question of who our beneficiaries should be. He is in his 50s and single; my wife and I have been married for 20 years. None of us has children.
As we made our confessions over cappuccinos, Tim and I came to realise how something that is treated as almost a box-ticking exercise by the financial services industry is actually really confronting for people like us.
“Who inherits your estate on your death?” is an existential question. If not “the kids”, it can lead to more questions and quickly take you to a dark place.
Who will take care of you when you are frail? Who will have lasting power of attorney to make key decisions for you? Who will be the executor of your will?
There are many reasons why people don’t have children. For some, the issue can bring back painful memories of opportunities lost, the sadness of trying and failing or the pain of bereavement. Others — like my wife and I — are childless through choice. We are not alone: a growing number of couples seem to be making that choice.
Around one in six women now reaches 45 without bearing children, according to the Office for National Statistics. The birth rate is falling in the UK and around the world.
In same-sex relationships only one in four female couples and one in 15 male couples have children. If you count younger singles, those who have lost loved ones, and those who have never found the right partner, you quickly realise that a sizeable minority of the population could be feeling similar tensions to Tim and me. And that is before we add in those parents estranged from their children.
Often, the richer you become, the harder it is to make a decision on who inherits your wealth. You can be talking about serious, life-changing money. What might that do to their lives and will it be positive? What, if anything, might you want in return?
If the answer to who will inherit your wealth is not “The kids”, is it your wider family? If you are giving to nephews and nieces, will it be the same amount for all of them? Or will you give more to the ones you see or like best? Or does the question become so hard you decide not to leave anything to any of them?
A friend of mine decided he would rather leave his portion of the family estate to a beer-brewing nun in Germany because he has enjoyed her produce over the years. The thought brings him much more happiness than leaving it to a brother who is already wealthy or nieces he never sees.
This leads to the charity option. Leave 10 per cent or more to charity on death and your inheritance tax rate is cut from 40 to 36 per cent. Over £4bn was left in legacies from 142,000 bequests last year. A quarter of that went to just 10 charities. A large bequest could make a huge difference to a smaller charity that means something to you.
So have I learned anything useful from this experience that might help others in a similar situation?
I could be flippant. Not needing to leave money for anyone frees you to spend, spend, spend; reverse-mortgage your house; and perhaps one day opt for assisted dying at a point of your choosing, with a pile of debt but a lot of happy memories. None of the financial planning textbooks tell you to do this — and, of course, this is not my plan! But here are some tips I have come up with for others in a similar position.
You’re not alone: Decisions around end-of-life finances are hard. Recognising and accepting that meant that I walked out of the coffee shop much lighter than I went in. Tell your advisers. If they are any good, they will sit with you, get you to explain how you feel in your own words, capture it and play it back. You can book a meeting to address just this one issue with the ambition of filling the form in together at the end of that meeting.
Give early: If you can afford it, think about giving money away now in smaller chunks. This way you can help friends and family immediately with specific problems — from paying for pet insurance to buying a first car or building a house deposit. If you are leaving everything to charity, why wait 40 years to do it? Giving more now makes the final problem smaller because you will have less to leave at the end. And it may also enhance relationships and your happiness.
Don’t try to make “forever” decisions: Life evolves. Our interests and passions change, and so do our friendships and relationships. This might be a horrible question to have to revisit again, but reviewing it every five years can make the decision less portentous — you do not have to cover all scenarios for forever today.
The “death question” might be an opportunity to explore what and who matters most to you while you are alive and whether you are devoting enough attention to them now and have the right life balance.
To be honest, I still have not completed my form, but at least I’m feeling more confident that my wife and I will actually be able to finish the job — before we die, at least.
Nathan Valbonesi is a chartered fellow of the CISI and leads the investment and wealth advice team at Weatherbys Private Bank