As I write, I still haven’t received an invitation to Prince Harry and Meghan Markle’s wedding. An Englishman called Washington who works for a 'Royal' bank…wouldn’t you think I was in with a chance? As hope of my invitation fades, I've consoled myself by keeping up-to-date with the tantalising details of the wedding plans as they emerge and, of course, by reading some of the more learned commentary on the union.
Most of the commentary from the private wealth industry has focused on one of two issues: first, the tricky topic of U.S.-UK tax planning and secondly, prenuptial agreements - newly fashionable in the UK following the Radmacher vs Granatino case in 2010. This juxtaposition of a family law angle and mainstream estate planning made me think more broadly about the differences between the two disciplines of family law and private client law (and, indeed, between family lawyers and private client advisers - two very different beasts.)
Walking down the aisle
Clearly, for the well-advised HNW family and for the trust and estate practitioner advising them, a wedding has always been a major estate-planning milestone. Wills, trusts and other structures have needed to be reviewed; spouse exemptions and other planning opportunities have presented themselves and new tax challenges have arisen, especially if a client is about to say 'I do' to someone from the U.S.
All of this was typically done without the involvement of family lawyers; indeed, it was only if a marriage ended in divorce that one might see the family law and private client worlds collide. Family lawyers, when all’s said and done, are litigators; a different creature to the average private client adviser and the average Society of Trust and Estate Practitioners (STEP) member.
However, the rise in popularity of prenuptial agreements has given new impetus to the relationship between the two types of advisers. Clients are now much more frequently referred by us to family lawyers for a prenup before they marry. For their part, one might say those family lawyers, working in this pre-marriage context, have a mindset closer to that of an estate planner than to the more adversarial modus operandi we sometimes observe in the context of divorce.
If the post-Radmacher enthusiasm for prenups is relatively recent, the decline in the popularity of marriage itself is not; a trend dating back to the early 1970s. The latest set of marriage statistics – the 2015 figures, published in February by the Office for National Statistics - show the marriage rate falling to the lowest level on record and, given that background, perhaps we should propose a toast to Prince Harry and Meghan for bucking this trend in some style.
Broader estate-planning trends were in focus in 2017 when RBC published its Wealth Transfer Report1, reflecting the results of a survey of over 3,000 HNWIs. Our sample included a range of relationships from married couples in traditional nuclear families to single parents. Taken together, only about one quarter (26 percent) of these HNWIs told us they had dealt comprehensively with their estate planning; just over half (54 percent) had taken the basic step of making a will.
Addressing gaps in will planning
Perhaps, like me, you find these modest percentages almost more alarming than the low marriage rate. As every STEP member knows, those statistics signal potential problems ahead for the families concerned: intestacy, unplanned succession, unprepared inheritances and so on. On the other hand, it's also true that, if this estate-planning gap is a problem, it's also an opportunity for those skilled advisers to fill the void.
So, to Prince Harry and Meghan, I say 'good luck'. To STEP members (and our family law colleagues) I say 'sharpen your pencils'.
Not everyone can marry a prince but, with the benefit of good advice, no-one need leave a right royal mess for their heirs.