What caught my eye this week.

I was bemused to see Adrian Chiles penning a glowing paean to the Delay Repay compensation scheme in The Guardian this week. I’d always imagined such warm feelings were an Investor family quirk.

As Chiles writes:

After a bit of a fiddle setting up your account, you automatically, as if by magic, get a cash prize if your train is delayed. OK, it’s compensation rather than a prize, but it’s still a beautiful thing.

On the services I use most regularly, generally having bought single tickets, on Avanti West Coast and GWR I get back a quarter of the price if it’s quarter of an hour late. And, along with LNER, I get back half the ticket price if it’s half an hour late, and all of it if it’s a whole hour late.

And it’s so quick! If your train’s not on time, into your account goes the money, bang on time. It makes the delay so much more bearable; even interesting. I end up willing it to pass the 15-minute mark.

Me and my sister know just where Chiles coming from. Trains to our ancestral home – a bungalow four hours from London – are invariably delayed. But Delay Repay has almost made it fun.

We’ll text each other as we approach the crucial cliff-edge for a higher payout:

Me: Nooo! I don’t think I’m going to hit the 30-minute threshold 🙁

Sister: Hang tough! There’s still time to get stuck behind a late-running train that leads to a shortage of platforms!!

German and Japanese trains may run on time, but where’s the fun in that?

Indeed if only the rest of the UK’s creaking infrastructure was gamified with cash payouts.

No doctor appointment available for six weeks? Enjoy coughing up your lungs as you shuffle out to spend this £10 voucher!

Brexit got you tied up at the borders? Here’s a free month of Spotify to entertain you while you wait.

I’m only half joking.

Have a great weekend.

[continue reading…]

Any mention of inheritance taxes in a Monevator article invariably produces heat in the blog’s comments. One reason may be that few of us are talking about inheritance in real-life.

Of course if you grew up in landed circumstances – strolling across the lower fields as your father waved his cane across your future realm whilst reassuring you that the family plantation in Barbados, the table at Annabel’s, and his collection of Nazi memorabilia would be all yours to – then your mileage may vary.

But in my (infinitely more limited) experience, talking about inheritance is mostly done in a jokey way.

Well, except in a few specific circumstances I’ll get to below.

And it seems my experience is pretty normal. According to Canada Life’s new report on the impact of longer lifespans, when it comes to talking about inheritance, everyone is NOT at it.

In its survey, the financial services giant found fewer than half of would-be bequeathers have discussed their wishes with the potential beneficiaries.

Although happily this number rises to 60% for those with children:

Source: Canada Life

I think it’s revealing that the ‘let’s talk about it’ figure rises slightly for adults with stepchildren.

Because in my experience this set-up – perhaps not surprisingly – is one of the few reliable triggers for The Discussion.

Talking about inheritance: when and why

For many people who might expect something when their parents shuffle off, only a big life event puts the topic of inheritance properly on the table.

Again, I’m not talking about the fortunate tier who’ve been passing down wealth for generations.

Nor those with very wealthy self-made parents. Entrepreneurs seem to take inheritance super seriously. I suppose they see it as an extension of a lifetime of financial achievement.

Rather I’m thinking of a typical aging middle-class couple who own a nice house inflated by 30 years of house price gains – but not much else in the way of riches outside of pensions.

Heir-raising conversations

After sufficient drinks – or maybe a nasty remortgaging shock – friends of mine born to such doughty stock have sometimes bemoaned their parents’ reluctance to broach the subject of inheritance.

“My parents wave their hands about ‘popping their clogs’ and threaten to spend the lot on cruises and skiing holidays,” a friend might begin. “But they never go skiing! They just buy ambitiously small trees from the garden centre and send money to that Smile charity or ActionAid. Presumably they hoard the rest.”

Already fearing this is sounding too mercenary, they typically continue: “I wouldn’t mind if they spent all the money on having fun, obviously. It’s their money. But they won’t spend it all – unless God forbid one goes into care. And then there’s the house, which must be worth a small fortune.”

Before, finally, the kicker…

“If I knew what I might be in-line for then to be honest it would really help us balance the books today. Because we could be making sacrifices for nothing – paying down the mortgage, not moving somewhere bigger, and Susan staying in that job she hates – only to end up with £250,000 in the bank that we can’t do much more with than give to our kids ourselves.”

Obviously every family and conversation is different.

But that’s the gist. A modestly life-changing sum of money may or may not arrive in anything from five to 20 years or more.

Realistically, nobody can model that, except for the parricide-curious.

Talking about it won’t usually make the timings much more concrete, either.

However having a proper conversation certainly wouldn’t hurt. It could prompt earlier and more substantial gifting, for instance. Or deeper investigations into mitigating inheritance tax.

Long-time readers will know that I’d whack up inheritance tax if I was the Chancellor.

But most of you wouldn’t, and I’m not the Chancellor anyway.

So my best advice to you as your friendly money friend on the Internet is simply to talk about it sooner rather than later, if you expect to receive a large legacy.

Because if you do end up facing unexpected inheritance tax charges, then by that point it will be too late to do much about it.

When people start to discuss their legacy

If you’re traipsing back from visiting your eldery parents every month wondering when they’ll finally take the subject of inheritance seriously, I’ve got bad news.

In my experience it usually requires something dramatic to shock people out of their complacency and ready them to confront their mortality.

I’ve noticed inheritance conversations come up after:

The death of one parent – Not something most of us would wish for. But it does focus the mind. (Generally overly-focusses. Be sensitive!)

Serious illness – A cancer diagnosis will usually get a parent to realise they’re not immortal. Again, horrible for all concerned. Although some will continue in denial anyway. Perhaps they feel that admitting to the possibility of death gives license to the rogue cells multiplying in their body. Who can blame them?

Divorce, remarriage, and stepchildren – I’ve noticed parents can get really edgy about passing on wealth to children with partners who enter their lives late. I’ve even seen this persist after stepchildren became seemingly beloved members of the family. It must spring from the atavistic urges at the heart of the inheritance tax conflict – supporting your selfish genes over others.

More charitably, parents may be wary of seeing their offspring and descendants diddled by feckless new partners. Especially if the end of a child’s previous marriage left them on high alert.

Til death do us impart

Yearning for your parents to talk about inheritance may be a classic example of be careful what you wish for.

But you don’t need to be Carl Jung or Sigmund Freud to understand why such shocks can bring talking about inheritance into the open.

Brooding on your own mortality can be fun when you’re 19 and mooning around graveyards quoting The Smiths to your first oh-so-serious girlfriend. (Or was that just me?)

But it’s much less fun when you’re into the second half of your life.

You’ve seen friends and family go. The mirror doesn’t lie and nor does your passport or your doctor.

So you prefer to look the other way and put your fingers in your ears.

It’s the same denial of reality that puts people off making a will.

From the Canada Life research:

Source: Canada Life

Those are pretty shocking figures. But we can’t help feeling that inviting death into the room might encourage him to stay.

Nobody wants the Grim Reaper casting around for candidates to promote up the running order.

Similarly, thinking about your children firing up a spreadsheet to calculate what you’ll be worth when you’re gone isn’t usually what motivates people to have children. It isn’t the sort of thing we like to think about or plan for.

It’s also easy to see how a new spouse who comes with kids from an out-of-sight – and often openly disparaged – former partner will raise suspicions.

They never included this bit in the Disney fairy tales. Only in those gruesome old German ones where somebody ends up getting eaten by their offspring. Or worse!

Primal scream

For related reasons, I’d suggest stressful life events can be bad times to actually make decisions about inheritance. Or any other big commitments for that matter. Even if they can be much-needed starting points.

Emotions are running high. Rationality is often dialled down to a tick-over level.

I was once called in as the family’s putative financial consigliere to look in on a relative after her husband died.

This new widow was telling people she’d have to sell her little bungalow and move into some kind of care facility because (a) she wasn’t long for this world and (b) she couldn’t afford to live in her existing home now he was gone anyway.

This was surprising to me and everyone else because (a) she’d barely seen a doctor in 30 years and was only 70 and (b) he was an assiduous saver and partner who had surely foreseen the probability of his passing before his wife.

Of course it turned out she was well provided for by her husband’s modified but ongoing final salary pension. More than a decade later, she still enjoys pottering around the garden of that same house.

When I spoke to her about it last Christmas she barely recalled her worries back then.

Grief can make anyone a little mad for a while.

And so though an unfortunate life turn that leads to important discussions taking place is better than never talking about it at all, please leave the heavy lifting for sunnier days if you can.

You can go your own way

Of course we can all see that it’s better to talk about these things ASAP, at least in theory.

Parents get time to investigate tax mitigation strategies if they want or need to.

And it’s easier for potential recipients to plan if they know whether they should reasonably expect a windfall in the future.

But a final reason is better peace of mind – for all parties – after having these fraught discussions:

Source: Canada Life

There’s oodles of research showing that feeling you have a purpose and that you’re in control improves your quality of life.

We usually think about this with respect to our job or savings.

But it seems it’s equally true of knowing where your money will go after you die.

Readers! As a blogger of fairly humble origins who doesn’t have kids, most of my thoughts about inheritance come from observation rather than lived experience. So I’d love to hear from parents and children who have struggled – or not – in talking about inheritance. Let us know how you’re doing in the comments below. In the future I’ll update this article with your insights. Also, let’s keep the politics of inheritance taxes out of this thread. They’ll only derail the subject at hand. Thank you!