Succession planning for GPs and dentists

Succession planning for GPs and dentists - Why make a will? 

A surprising number of GPs and dentists that we ask do not have a valid and up-to-date will. It is understandable, with all the day to day demands of working in a practice, that getting your own financial affairs in order might slip down the list of priorities. However, there might well be unintended consequences of failing to put a will in place. In this article, Hill Dickinson’s Legal Director Richard Marshall outlines the law around intestacy, some common misconceptions, and why it is important to have a will in place that reflects your wishes. 

Working in an environment where conversations around death and mental incapacity can become a daily occurrence, it is easy to become somewhat desensitised to the idea of your own mortality. Having advised clients about succession planning, wills and estate administration for over 10 years, I know the feeling. 

The idea of talking about your own end of life planning, or making provision for the possibility of lacking mental capacity in the future can, at best, feel like a busman’s holiday, and at worst feel like an all too real recognition of life’s inevitabilities.

However, taking the time to make a will opens up a wider conversation about succession planning, which goes beyond the paper and ink included in a will and considers your aims and objections as to whom your estate will pass on death, what is needed in order to achieve these aims, and how this can all be attained in the most tax efficient way.

Many people often believe that they do not need a will. It is usually predicated on the belief that their affairs are straightforward and will be easily administered on death. Sadly, this is often not the case, and whilst circumstance may seem straightforward following a death, they can quickly become complicated due to there being no will.

The Law

When someone dies without a will, the law dictates to whom your estate will pass, under the Intestacy Rules. The Intestacy Rules set out a hierarchy of family members who can benefit from the estate, with a surviving spouse/civil partner (if there is one) taking priority over a portion of the estate, following which they will share the rest of the estate with surviving children (if there are any). Beyond these members of the nuclear family, the devolution of the estate then passes to those who the law would deem as more remote family members, such as surviving parents, siblings, aunts and uncles and so on.

Common misconceptions

One of the biggest misconceptions, therefore, is that everything will pass to a surviving spouse/civil partner on death. This is not necessarily the case. If there are surviving children, then the surviving spouse/civil partner will receive the personal possessions and the first £322,000 of the estate. The value of the estate over this amount will then pass as to 50% for surviving spouse/civil partner and 50% for the surviving children in equal shares. When you take into consideration property prices, there could be a lot of the estate which is not available to the surviving spouse/civil partner if the Intestacy Rules were to apply in such circumstances.

It is also worth noting that, as it currently stands, the law does not provide for unmarried partners. In such circumstances, an unmarried partner would receive no benefit from the assets of the estate under the Intestacy Rules. 

Unintended consequences

For a surviving unmarried partner, therefore, one recourse they could have to benefit from the estate would be the generosity of those benefitting under the Intestacy Rules to redirect the assets of the estate to the unmarried partner. This is usually not possible if those benefitting under the Intestacy Rules are minors, or if those benefitting from the estate are undergoing a financial assessment such as divorce, bankruptcy or (for elderly parents for example) paying for care. This could therefore leave an unmarried partner with no option but to pursue an expensive claim against the estate resulting in prolonged negotiations and even Court action.

There have also been many instances where the deceased was separated from their spouse/civil partner but not divorced at the date of death. In such circumstances an estranged spouse/civil partner (who could potentially be in a new relationship) would then benefit from the estate, potentially at the expense of the children of the marriage/civil partnership. Similarly, some parents are estranged from one of more of their children, who could again benefit at the expense of the surviving spouse/civil partner. 

The Intestacy Rules also give adult beneficiaries an absolute immediate right to benefit from the assets of the estate. This can cause problems if the beneficiary in question is in receipt of means tested benefits, lacks the mental capacity to manage their financial affairs, or may use the inheritance in a self-detrimental way due to alcohol or substance abuse. Similarly, if a beneficiary is going through a divorce or bankruptcy, then their inheritance may be depleted or even lost due to such financial assessment. 

These are only a few examples of the issue that can arise due to not leaving a will on death. Fundamentally, without a will you are arguably leaving everything you have worked for during lifetime to chance, as those assets will pass in accordance with whatever law is applicable at the time of your death, to whichever beneficiaries survive you and qualify for such an entitlement, irrespective of their circumstances or even their relationship with you during lifetime. 

Whilst making a will can seem like a very miserable processes, it sits within a wider discussion about succession planning. This is much more focused on the here and now, exploring what you want to achieve in lifetime with a view t how that will the pass on death. Within the context of succession planning, a will is only one of the tools that can be used to ensure your assets pass in accordance with your aims and objectives, and in the most tax efficient way possible. 

Like most things, it just starts with a conversation. 

Please contact Richard Marshall for more information.

We asked Stephen Brownlee from Chase De Vere, specialist independent financial advisers, to provide their views on the importance of making a will. This is what he said:

“Just about everybody should have an up-to-date will in place. It is one of the first questions that we ask our clients because not having one is likely to prove a false economy. Even if you think that your finances are pretty straightforward, if you don’t have a valid will, you can’t plan ahead effectively and this could cause major problems for your loved ones when you die.”

We hope you found this article useful. Watch out for our next article in the series: 5 tips to consider for making a will. 

Hill Dickinson’s national primary care team provides specialist legal support for GPs, dentists and primary care practices. We assist with:

For more information, please contact Alison Oliver, Partner.

For further details on our health and social care expertise, please contact us or a member of our health and social care team.