Like many other developed nations, the UK’s population is rapidly ageing as people eschew having children. This has caused a seismic shift in people’s later life plans as many older people do not have children or grandchildren to leave their estate to.
Leaving your assets to a spouse can cause a variety of complications. What if they rely on the funds to keep on living in the house? What if they require care? What if they pass away at the same time as you or not long after? In which case, what happens to everything you worked for? It won’t go to the dog, that’s for sure!
Let us guide you through this increasingly common scenario and provide tips on protecting your estate and leaving a legacy.
A Changing Population
There are currently 12.8 million people in the UK who are sixty-five and over, residing at home or in care homes. According to the UK’s Office of National Statistics, by 2050, it is projected that one in every four people in the UK will have reached this age – an increase from the current approximation of one in five, and by 2069, it is projected that there will be an additional 7.5 million people in this category. This would mean that the UK’s aged population accounts for 26.2% of the population – a whopping 19.8 million people.[1]
According to the Office of National Statistics, 23,000 women aged 80+ and who are, or were, married did not have children. Recent figures demonstrate that 19% of women who have reached the age of forty-five have not had children. This is more than double (9%) the figures of their mother’s age group.
The Upshot
The practical upshot of this shift in demographic for estate planning is that many couples do not leave an inheritance for family members. We have seen a huge trend in older couples SKI-ing (Spending the Kids’ Inheritance) as they choose to enjoy their hard-earned money. Many are deciding to spend their later years fulfilling dreams and seeking new experiences instead.
Without children to pay for or worry about, senior couples can SKI without regret!
A Core Issue
However, no children to leave an inheritance to also means there is no one to look after you in your old age. Of course, having family members to care for you in your later years is no reason to start a family, but it is, of course, an added bonus, both emotionally and financially.
As a couple reaches old age together, it is inevitable that one of them will likely require some level of care or treatment at some point. It is also possible that one may require long-term care. Estate planning is essential in this scenario as it is vital to ensure you have long-term provision for both of you as a couple, as well as a widow or widower further into the future.
If you have not set aside financial provision for this scenario, then care can be provided by the local council. This care is based on means-testing, which considers the individuals’ assets, including the 50% share of any joint assets.
Thankfully, this does not include the family home if one, or both, members of the couple continue living there.
As couples frequently have a variety of assets between them – some individual and some joint – an imbalance can occur. This is a particular issue if the level of care reaches a certain point or residential care is needed. Initial care is often self-funded through accessible assets, pensions, savings etc.; however, if the price increases, assets will likely need reviewing, and different funding options would need to be investigated.
Preparing For the Unexpected
Planning must take into account both the expected scenarios as well as those that are unforeseen. Sometimes it is clear which partner is likely to need care; however, specialist care is sometimes needed, or the other partner may also require care or pass away. These situations are distressing, and a little planning goes a long way in easing the burden should they occur.
Depending on the stipulations in the will, if a partner does pass away, assets will usually pass to the other partner and can be used for their care. Inheritance tax is not due on estates that pass from spouse to spouse; however, it is common that the assets inherited will result in the surviving spouse moving beyond any council savings threshold.
Household costs and everyday bills can also increase when one partner requires care. Perhaps the heating bill escalates, an adapted vehicle is needed, special diets must be catered for, and maybe home adaptations become necessary. Therefore, we assist all our couples with setting up emergency funds and liquid cash to cater for these types of unexpected scenarios.
The Importance of Flexible Planning
As you can see, just the two of you does not necessarily mean life planning for old age is simple. Life is unpredictable – so later life planning must be flexible and all avenues need to be considered.
Along with our estate planning services, we offer regular reviews to keep abreast of changing scenarios and circumstances. We can easily make tweaks and edits to your plans which accommodate varying lifestyle choices.
Estate planning is not just for old age, and we recommend starting as soon as you have assets of note. If you would like help at any stage of life, don’t hesitate to contact The Planning Bee for a free consultation.
Our friendly team of experienced paralegals will assess your assets, discuss your goals, and help you to achieve a happy and secure retirement with one another.
[1] “Overview Of The UK Population – Office For National Statistics”. Ons.Gov.Uk, 2021, https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/articles/overviewoftheukpopulation/january2021.