Six later-life planning triggers advisers can use in client reviews
When financial plans change, the supporting documents may need to change too
Most clients understand the value of a financial plan.
But the documents and decisions underpinning that plan can easily fall out of date.
Aviva's Intergenerational Wealth Shift Report found that only 32% of people surveyed had a will and knew where it was, while only a third of over-75s had a Power of Attorney in place.
Regular reviews give advisers a practical opportunity to spot where key arrangements may need attention before issues arise.
With that in mind, here are six common triggers to help start the conversation.
1. Major life events
Marriage, divorce, bereavement or the arrival of children or grandchildren can all affect what a client wants to happen next.
These events provide a natural opportunity to revisit:
- wills
- beneficiary nominations on existing trusts
- Expressions of Wishes
- long-term wealth transfer plans.
Even if existing arrangements remain suitable, a review can reassure clients that their plans still reflect their current wishes.
2. Changes in wealth
As wealth grows, planning can quickly become more complex.
Clients who have accumulated assets over time may find that previous arrangements no longer reflect their current intentions, family circumstances or long-term objectives.
A review can help identify whether these arrangements are still suited to the outcomes they want to achieve.
3. Retirement
Retirement often prompts clients to reassess their financial priorities.
From 6 April 2027, most unused pension funds will be brought into an individual’s estate for Inheritance Tax (IHT) purposes. This will add another dimension to retirement planning discussions. Even if a client isn’t ready to put a plan in place yet, this change cannot be ignored.
Retirement discussions may be a prime opportunity for clients to engage in a more holistic financial planning conversation to ensure they understand their options and the potential impact of their pensions being inside the estate for IHT.
Retirement conversations will have a greater focus on income, family support and legacy planning. This can be a good time to review Expressions of Wishes, estate planning arrangements, and client’s priorities for wealth transfer and family finances.
A retirement review can help clients make sure their plans remain relevant for the next stage of life, ensuring they’re well placed to plan around upcoming changes.
4. Future capacity
The research suggests that only a minority of over-75s have a Power of Attorney in place.
Conversations about future capacity can be sensitive, but they are an important part of later-life planning.
Having these conversations can give clients the reassurance of knowing that people they trust can help manage their affairs if circumstances change unexpectedly.
Clients should also be aware that a desire to undertake IHT planning can be disrupted by a loss of mental capacity. If this happens, it may be too late to take steps to reduce a client’s potential IHT liability, as attorneys are subject to significant restrictions when disposing of assets for IHT planning purposes.
Review meetings provide a natural opportunity to check that the appropriate arrangements are already in place. They also offer an ideal time to make sure that a client establishes their IHT and gifting plans well before their ability to implemented becomes restricted.
5. More complex families
Blended families, second marriages and changing family structures can add further planning considerations.
The complexities of these structures may mean reviews of some of the following areas could be needed.
Wills Show more Show less
In complex family situations, it’s prudent to make sure your clients’ wishes are clearly documented in their wills. In these circumstances, mutual wills could be considered in place of mirror wills. A mutual will involves a legal agreement between the parties that restricts the survivor from changing the agreed testamentary arrangements after the first person has died. This may provide greater certainty that the intended beneficiaries will not be changed after the first death.
It may also help protect beneficiaries in situations involving remarriage, blended families or fractured relationships.
Trust arrangements Show more Show less
If considering a trust for a client with a complex family structure, you should pay particular attention to the terms of the trust and the definition of the potential beneficiaries.
Many trusts allow for a wide class of potential beneficiaries including children, remoter issue, children born outside marriage, stepchildren and their remoter issue. However, this should not be assumed and should be checked carefully against the wording of the trust deed.
For discretionary trusts, settlors must be aware of the powers their trustees will have in the appointment or advancement of capital to beneficiaries. Before settling assets into a trust, the settlor should be comfortable that the terms of the trust deed reflect their family structure and their wishes.
Beneficiary intentions Show more Show less
In complex family situations, beneficiary nominations should be reviewed carefully to make sure the individual’s wishes are clearly documented. This is particularly the case for defined contribution pensions.
A client may be comfortable for a surviving spouse to benefit from the pension during their lifetime, but concerned about who receives any remaining funds when their spouse dies. Where benefits are paid into beneficiary drawdown, the spouse may be able to make their own expression of wish, potentially directing the remaining pension funds to their own children rather than to the original member’s children.
An alternative approach could be to use an integrated trust arrangement or nominate a bypass trust under an expression of wish. Instead of death benefits going directly to an individual or into a beneficiary drawdown plan, they may be paid to a discretionary trust. This can provide greater control over who may benefit after the member’s death and after the death of a surviving spouse.
Before using with a trust-based option for pension death benefits, consider potential tax treatment, including the special lump sum death benefits charge and the inheritance tax position.
As family circumstances evolve, a key financial planning priority for clients may mean they want reassurance that their plans still reflect their wishes.
6. Supporting families sooner
Many conversations focus on what happens to wealth after death. However, some families may want to provide support to future generations earlier.
As families think about how wealth moves between generations, advisers can help clients to consider whether lifetime gifting could support younger family members to become more financially resilient.
Questions advisers may wish to explore include:
- Could family members benefit from support today, rather than on death?
- Have clients had open conversations about inheritance expectations?
- Could earlier gifting help clients to reduce their estate for IHT purposes, as well as helping the next generation?
- Do your clients understand the implications of different wealth transfer approaches?
The Intergenerational Wealth Shift Report found that many people expect inheritance to play an important role in their future financial security, highlighting the value of open conversations about how and when wealth may pass between generations.
Some clients may prefer to see the impact of their support during their lifetime, rather than relying only on future estate transfers.
Gifting in lifetime will become more compelling for many clients after 6 April 2027, as most unused pension funds will be subject to IHT where they are left to non-exempt beneficiaries.
Clients may wish to create a pattern of regular gifting by drawing from their pensions and gifting to future generations. This could help both sides of the generational divide, reducing the balance of pensions which are chargeable to IHT and helping the beneficiaries of gifting plan their own finances earlier.
Clients will also need to understand the impact of the available gifting allowances and relevant exemptions to understand if they would benefit from a withdrawal and gifting strategy.
Bringing it together
Rather than treating wills, Powers of Attorney, Expressions of Wishes, trusts and wealth transfer decisions as separate conversations, advisers can bring them together within a broader later-life planning review.
Questions advisers may wish to explore include:
- Is the client's will still appropriate?
- Are Powers of Attorney in place?
- Have Expressions of Wishes been reviewed?
- Have family circumstances changed?
- Have inheritance expectations been discussed?
- Could lifetime gifting form part of the wider conversation?
Good planning is about more than building wealth.
Reviewing the structures, documents and decisions behind a financial plan can help keep clients' intentions clear, relevant and aligned with the needs of future generations.
Whether conversations focus on wills, Powers of Attorney, Expressions of Wishes or lifetime gifting, advisers can help clients move from assumptions to action and create greater certainty for the people they care about most.
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