Why Christmas can be the perfect time to tackle big family financial decisions: Sarah Coles

If you have good relationships with your broader family, and there are no sensitivities that stop you from having tough conversations, it can be a great time to bring up things that affect you all.

This can be particularly important when members of the family are getting older. You may, for example, need to have discussions about care. It’s something we all need to think about as we get older: who do we want to look after us, where do we want to live, and how will the cost be covered?

Someone who expects to move in with family members should check whether that’s realistic. It can be a difficult conversation, especially if different family members have conflicting expectations, but it’s far better to discuss it well in advance, so there aren’t any nasty surprises.

Caring roles aren’t the only key ones as we get older. There may also be the need for someone to make decisions on our behalf if we’re no longer able to.

For that we need to set up a power of attorney, which establishes someone (or a group of people) to make these decisions: you need one for health and care considerations and a second one for financial ones. If you’re putting this in place, Christmas may be an opportunity to make it clear to your family who will have the power to make decisions, and why.

There’s also the issue of who we choose to be the executors of our will, and any number of inheritance questions.

Whether or not you tackle this with your whole family around will depend on how you plan to leave your estate, and how your family feel about it.

However, if you’ve set up something relatively straightforward, you might decide it’s sensible to bring it up. It has the advantage of ensuring everyone knows where they stand, and there’s no risk of misunderstandings later.

Younger family members might also want to broach the subject of lifetime gifts with older relatives.

Not every family member will have been glued to the Budget, or be aware of changes affecting farms, family businesses and AIM stocks – or the fact your pension is likely to be considered when calculating your inheritance tax bill if you die after April 2027. If your family could be touched by these changes, then lifetime gifts can be an incredibly useful way of cutting your tax bill.

Even if you’re not touched by the rule change, if an older person has spoken about leaving a legacy, and younger members are struggling with milestones - like buying a home of their own, you might be able to kill two birds with one stone as a family. The older person may be able to give gifts sooner rather than later, when they may be needed most, and it might be a sensible time to raise the topic.

If an older person is considering using equity release, this is another vital conversation to have with the wider family. It will mean there’s less of their home to leave in their will, and if they’re relatively young, the size of the debt can balloon during their lifetime. Of course it’s completely up to them what they do with their own home, but it’s worth the whole family understanding the implications.

This isn’t just a time for conversations affecting older members of the family though.

Any family member could be going through something they need help with. In some cases, it’s direct financial support, but in others it’s guidance in areas ranging from work to home. It’s not always easy to ask for help.

Some people don’t want to worry their family, whereas others might be embarrassed. However, families will want the best for one another, so it’s worth facing up to your fears and having the conversation.

Even if you don’t have anything specific to broach this year, you might want to bring up financial issues.

You might want to discuss your long-term goals, or something challenging you’re facing. In those years where there’s no huge crisis going on, it helps to normalise money conversations, so when someone is in dire straits, it feels easier to raise money questions – because it’s already something you’re happy discussing together.

More complicated families

Of course, this isn’t going to work for every family. There may be tensions that make it impossible to broach the issue of money.

It can also be more trouble than it’s worth to discuss inheritance if you plan to leave your estate in a way that’s going to cause problems. In those instances, it can make sense to explain your thinking in a letter of wishes you keep alongside the will, rather than trying to do it in person.

You may also want to hold back if someone has a more dominant personality, or a history of persuading other family members to act in a way that leaves them worse off. Letting that person know your plans could give them an opportunity to lean on other family members.

If your family is complicated, and you don’t really want to discuss a particular issue, it can help to plan what you’ll say if it comes up. You might, for example, agree to talk to them separately after Christmas, or make it clear that this isn’t something you will ever want to discuss. That way you know what to do if you’re blindsided by something.

Because, while some families can benefit from an open, honest and supportive conversation around the turkey, for others it’s the recipe for a massive and explosive row that ruins Christmas.

Christmas spending

Living in Yorkshire and The Humber means you’re likely to have been much better at keeping a lid on the cost of Christmas, because our research shows an impressive 57 per cent of people are spending £500 or less on celebrations. This compares to an average of 47 per cent - and is only beaten by the South West at 58 per cent.

If you’ve bust the Budget this year, it can be tempting to put your head in the sand and borrow your way through to the New Year, but this is a sensible time to take stock.

You need to know what you’ve borrowed and how much interest you’re paying on each slice of your debts.

Then you need to make a plan for how to pay them back, as soon as possible, at as low a cost as possible. For a region that’s so on top of cutting costs, this should be a walk in the park.

Sarah Coles is Head of Personal Finance for Hargreaves Lansdown