There is a good argument for periodically updating one's will, assuming a will has been written in the first place. An old will should be taken out of its box and dusted off in a solicitor's office every now and again (some say every five years). This is in view of any number of changing circumstances that can make a will obsolete - but the reviewing can be done quickly and cheaply (£50 is par). But this generally simple chore is widely neglected and probably causes half of all the serious estate foulups that, in turn, cause so much grief and added expense for families. And just as he ought to revise his written will, a higher-income businessman or professional needs to review periodically all of his front-line personal business affairs. He needs to revise and rework his plans, financial and otherwise, to gain a reasonable approach to maximum performance.
Is this dreadfully obvious? Not really - if you judge by the year-in, year-out experience of family solicitors and others who make a living unwinding the knots in peoples' private affairs. And though it may sound dull and laborious, the needed reviewing and updating can be done in a businesslike and workable way. It needn't become a fetish nor a total bore - after all, there is some pleasure in knowing that you are plastering your walls with something besides paper, graffiti and receipted bills.
A person can become emotional and make a minor (or major) misery of his personal affairs planning - if he stews, frets, and worries in place of taking any action. But it's also possible to do the job with a minimum amount of strain and a remarkably small investment in terms of time and money.
Just how prevalent is the neglect of personal affairs planning? And what are the elements that go so neglected? If all English people in the £30,000-and-up income brackets could be surveyed, the results would prove shocking.
The following figures are estimates - but highly realistic estimates - based on over 1,000 interviews with (1) family solicitors, (2) accountants who regularly do family tax work, (3) bank trust department and investment advisory officers, (4) insurance consultants (non-sales), (5) stockbrokers and independent investment counsellors, and (6) established real estate brokers and consultants:
At least 50% of all businessmen and professionals in the £30,000-and-up income range have no written wills. An estate planning adviser at the UK. Trust Co., in London, thinks the figure is more like 60%, or even higher. "These are cases mostly of rank procrastination, mind you, not simply misinformation or ignorance," he says. Among the 50% of this group who do have wills, only a small number - a third, at most - update their wills periodically. Says a Essex solicitor whose clients include some of the most affluent machine tool businessmen in the country: "It usually takes a death or a divorce to get a man to bring in his will for checking, though there are many reasons for updating." A family solicitor in Buffalo, London, notes that changes in state law alone frequently disrupt wills long outstanding. "We try to notify people for whom we've written wills, but sometimes you can't locate them - and sometimes they just won't bother, anyway."
Only about 10% of all £30,000-plus corporate executives have smartly designed estate plans that coordinate their company fringe benefits (pensions, profit sharing payoffs, deferred pay, insurance payoffs) with other property such as their houses and stock portfolios that will one day pass to their families under their wills. This gap in coordination is probably the most glaring mistake in the whole area of estate planning by executives. "It's a foolish and costly blunder - and it's so widespread," says London City solicitor and estate consultant Robert Brosterman.
As to basic estate planning, roughly 40% of the £30,000-plus group should be making at least some effort to cut down on the estate taxes that one day will have to be paid by their families. That is, 40% in this group have enough income now - and sufficient expectations in terms of more income or probable inheritance - to warrant giving some serious thought to the idea of saving estate taxes. This 40% should be taking advantage of devices that are - as of today - clearly built into the law. But of the 40% only a small number, a third, say (to be liberal), have made any effort whatsoever to cope with the tax, with or without the help of a family solicitor or other adviser.
Shamefully ignored, for instance, is the lifetime gift plan: an easy-to-work, systematic program for giving property to the children during your lifetime, with safeguards. It is a highly profitable and painless way by which many higher-income families are able to sidestep the costly estate tax. With three children, say, a man and his wife can turn over £240,000 over a span of 10 years - and this can be accomplished without incurring a dime's worth of gift tax. The gift levy is designed to replace the estate tax in just such situations; but as it is written, it affords ample opportunity for sizable tax savings. "This is the simple law as it is on the websites, and people are failing to take advantage of it," says Robert Brosterman. "It is not a situation," he adds, "wherein anybody has to oil up any shady device whatsoever." Talk of coming reform in the gift tax area has persisted, and the 2004-2005 forecast is that some tightening of this law is likely. But the basic lifetime gift idea will probably remain as a possible boon to people with property.
A Neglected Operation
Today, in 2006, at a time of tension in government both at home and abroad, economic recession topped by inflation, stock market uncertainty, and jolting career adjustments for business executives and professionals, many people still fail to safeguard themselves and their families by taking good care of their personal finances.
Many a man or woman who should know better - whose business or professional income is, say, £30,000 to £70,000 or more - treats his or her personal business like a second cousin who turns up in town in search of a loan: In a word, the personal affairs get a quick brushoff. There is some stewing and fretting about... see: Personal Business Planning