Research from pensions and retirement specialist LV= highlights how millions of Britons say they want to plan to pass on wealth to their children and grandchildren in a will – but fewer than half have written one.
The latest LV= Wealth and Wellbeing Monitor – a quarterly survey of 4,000+ UK adults – examines the attitudes of people to passing on wealth to their children and grandchildren.
Failing to plan write a will or complete estate planning can lead to large inheritance tax (IHT) bills being levied on a person’s estate when they die.
The starting point for IHT is £325,000. When the value of your estate exceeds this amount, anything that isn’t exempt will be taxed at 40%.
Government figures shows that inheritance tax receipts during the tax year 2020 to 2021 were £5.4bn, an increase of 4% (£190m) on the tax year 2019 to 2020.
Clive Bolton, managing director of protection, savings & retirement at LV=, said recent rises in houses prices mean the estates of a rising number of people could unexpectedly face inheritance tax bills
LV= Wealth and Wellbeing Monitor found:
- 88% (30m) of people with children say they plan leave money to their children/grandchildren in their will but only 41% have written one. 59% (20m) parents do not currently have a will
- Although over half (57%) of people with children are considering a consulting a financial adviser about the best way to pass on wealth, only 13% have done so.
- More than half (56%) of people with children say they are considering writing wealth into trust but only 12% have actually done so
- Mass affluent consumers – those with assets of between £100,000 and £500,000 excluding property – are more likely to have their affairs in place to pass on an inheritance.
- More than half (51%) of mass affluent parents have a will in place.
- 20% of mass affluent parents have put money into an investment for their children or grandchildren (compared to 12% of all parents)
- 17% of mass affluent parents have spoken to a financial adviser about the best way to pass on wealth
- 13% of mass affluent parents have written wealth into trust for their children. The average amount written into a trust was £184,000 while more than one in five (21%) wrote more than £250,000 into a trust
Previous LV= research found that of all grandparents that gave money to their grandchildren:
- 15% (1.1m) gave more than £10,000
- 10% (775,000) gave more than £20,000 and 7% gave more than £50,000
Bolton added: “The rise in value of housing and other assets means inheritance tax is a potentially a problem for many estates but it is relatively simple to avoid with some careful planning.
“Although people recognise the financial benefits of doing things like writing a will, it is striking that only a minority have taken action to do so.
“Estate planning can save a people a huge amount of tax and ensure your family receive a financial legacy you want them to have. Inheritance Tax is usually charged at 40% on anything above the nil rate band – so the potential tax savings exceed the cost of taking financial advice.
“Taking action early and consulting a financial adviser means more of your estate goes to your beneficiaries rather than the taxman.
“There are many ways for people to avoid inheritance tax and the best way to do this is to consult a financial adviser and ensure that you have done things like writing a will, use gifting allowances or put assets into trust.”
