Why Are Younger Generations Taking Succession Planning Seriously?
There is magic in having a proper succession plan in place and disaster can unfold in the absence of it.
There has been an increase in people of all generations getting their house in order following the recent ‘triple whammy’ of threats with the fallout of the Covid-19 pandemic, war in Ukraine, and with the UK teetering on the edge of recession. For several years now only approximately half of the UK population have a Will in place. Promisingly, younger generations are leading the way when it comes to getting organised for the inevitable. Farewill’s recent survey found that the number of ‘Gen Z’ers’ (born 1997 – 2012) making Wills doubled in 2022, and the number of Millennials (born 1981 – 1996) making them increased by 6% compared to 2021.
Succession Planning Popularity
The popularity of succession planning for younger and next generations is timely; Baby Boomers are expected in the next 27 years to pass on the most substantial intergenerational transfer of wealth ever (of over £5.5trillion). Planning for the inevitable is an ‘on fleek’ topic through shows like Succession, which offers a glimpse into the waves of difficulty and uncertainty grief can bring with it in the context of a deceased media mogul’s vast business empire.
Younger generations are recognised as being conscious and expressive rather than repressive, so this is likely to be contributing to the rise in Wills being made by them. Other reasons younger generations are viewing succession planning as popular could include the rise in disputes, changing nature of assets and liabilities, and the changing demographic and attitudes generally.
Succession Planning to Fend Off Disputes
Perhaps propounded by the rising cost of living, claims against deceased’s’ estates are significantly rising. It’s likely as younger generations grow and the average life expectancy increases, contested Wills and estates will too, which is another reason to get planning early.
Changing Nature of Assets and Liabilities
The nature of assets being passed down are changing as is the proposition behind them with a greater focus on ethical investments, and priorities of future generations changing.
The FCA’s recent report showed the number of UK adults holding cryptoassets has over doubled since 2021. Specialist advice is often required in respect of passing crypto assets on, and regarding the taxation of these assets and storage of things like digital keys/ wallets in order to help your beneficiaries and executors.
Even if younger generations are still building wealth without tangible assets to leave, as part of holistic succession planning they can consider among other things, how their digital footprint including social media accounts are managed after death, provide for the maintenance of pets, guardianship of children, etc. Wealth is changing and tech is making generations richer than ever; the increase in the use of artificial intelligence will advance this further.
Liabilities are also changing as generations grow older it’s more possible they’ll live in increasingly expensive assisted living facilities.
While future generations await their inheritance, they are taking out more debt during the cost of living crisis than their older counterparts. Thinking about the people who carry out your wishes in your Will (your executors) is therefore important particularly if the nature of your estate is complex.
Changing Nature of Demographics and Attitudes and Dispelling Myths
Future generations’ family structures and demographics are changing so leaving things to chance can prove more disastrous than ever before as the rules in place which govern how a person’s estate devolves in the absence of a Will (known as the rules of intestacy) remain outdated. Gone are the days of families only having 2.4 children, there is now a rise in blended families and same sex families, and divorce rates continue to upsurge.
The rules of intestacy are starting to keep up a little; for deaths after 26 July 2023 for those who are married or in a civil partnership, the first £322,000 of assets and the deceased’s personal possessions.
pass to a surviving spouse (increased from £270,000), the remaining assets are split between the spouse/ civil partner and any children. ‘Common law spouses’ (there is no legal definition of these) still remain unaccounted for under the rules of intestacy.
Inheritance Tax (IHT) allowances still favour those who are married or are in a civil partnership and those with lineal descendants. Unless any other reliefs or exemptions apply for IHT purposes, married couples/ civil partners with children can leave up to £1million free of IHT after the second death, for those who are not married or in a civil partnership/ without children, this is capped at £325,000.
As future generations forge their own important connections, succession planning is becoming ever more vital.
Many terms surrounding sex and gender are rapidly changing an expanding to accommodate the expanse of identities embraced by all generations and the law will no doubt change to accommodate further terms in the future. How we talk about, and approach succession planning and estate planning continues to change and terminology, precise drafting and inclusive language is vitally important in documents to ensure there is no confusion.
Planning is Magic
Houdini left a secret code in his Will to be contacted in the afterlife, Shakespeare included a wish that his wife received his ‘second best bed’, reportedly Kim Kardashian’s written into her Will she’d like to ensure her hair and makeup are perfect when the time comes. As part of succession planning, you can also discuss things like lifetime gifting, and protecting assets through setting up Trusts in a Will or in lifetime.
Setting the Example
Each of us had a one in 400 trillion chance of being here; each life is significant and succession planning is important, no matter whether wealth is actual or sentimental.
The next gens have more assets in the ether, an appreciation of tech and how things are changing through the rise in the use of artificial intelligence, which will bring with it both complications and ease in respect of succession planning and are part of a movement away from strict ‘norms’ and defining terms previously prescribed.
It’s refreshing to see that younger generations are hopefully understanding that for the cost of the latest pair of Balenciaga’s they could ensure their legacy lasts; they perhaps understand the importance of leaving a lasting impression after life than their predecessors could. After all, there is no success without successors.
This article was first published with ThoughtLeaders4 HNW Divorce Magazine, October 2023.