Buttoned-up Brits don’t talk about inheritance tax
The research, commissioned by Brewin Dolphin, showed that more than a third (36%) don’t feel comfortable talking about a legacy. The poll of 4,000 UK adults shows that a quarter (26%) of people say they haven’t discussed the subject with loved ones because they’re not old so it’s not a priority. One in seven (14%) don’t like talking about death and one in ten (11%) say they avoid it because it’s a morbid subject.
Most are prompted to do so by a health scare, a near-death experience or simply by getting older. There are also some people who hold the key to unlocking inheritance conversations. After their partner or spouse (32%), people feel most comfortable talking to their mum (8%) or a financial adviser (8%) in the first instance.
Liz Alley, head of financial planning operations at Brewin Dolphin, said: “Talking about estate planning is an extremely emotional subject as people generally don’t like talking about money or death. However, our research shows that around one in 10 people would like to talk about it but haven’t found the right time and some people just don’t know where to start (7%).”
A key way to control the amount of inheritance tax paid by your relatives when you die is by making a will. October is Free Wills Month, which brings together a group of charities to offer members of the public aged 55 and over the opportunity to have simple wills written or updated free of charge. The hope is that people will agree to leave a small legacy to the charities, who often rely on legacy donations.
Brewin Dolphin gives the following tips to help manage inheritance planning:
1. The importance of an up-to-date will
Making a will can be a great excuse to talk to your friends and family about your wishes. The research found just four in 10 (40%) of over 55s have an up-to-date and valid will. With October marking Free Wills Month, take advantage of the nationwide offer to update your will or write one for the first time.
2. Take advantage of the gift allowance
You can give away £3,000 each year and this will not be subject to Inheritance Tax (IHT). In addition, parents can gift £5,000 to each child as a wedding gift, while grandparents can give £2,500. However, the poll shows one in three people don’t know how much you can gift each year without having to pay IHT.
Gifting money regularly throughout the year can be a great way to financially help loved ones and can also reduce your IHT liability. Some people will find it hard asking for money, so try and speak to your children and grandchildren to find out if you can help them with something specific, such as a new car or school fees.
3. Let life events help you start a conversation
The research shows that some life events, such as a health scare, could prompt people to talk to their loved ones about inheritance matters. However, there are some positive events, like a birth in the family or getting married that can also make people evaluate their plans. Use these opportunities as a way of talking to relatives about how you would like to pass on your wealth.
4. Talk about later life care
Social care is a hot topic and many people are worried about how they will pay for care when they get older. As a result, people may be starting to plan for this earlier than previous generations. It’s important to talk to your family about the care you want so they stay true to your wishes. This could be the perfect time to introduce the subject of inheritance as estate planning and later life care go hand in hand.
5. Talk about family heirlooms
If you find it hard to approach the subject of estate planning with your family then a good place to start could be talking about family heirlooms. People love to hear stories about older relatives, even if they never had the chance to meet them. Talking about items that are important to you or were important to other family members can be a great way to start a conversation about estate planning.