Majority of over 55s who plan to pass on wealth yet to think about how and when – meaning loved ones risk missing out  

by | Jul 11, 2023

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The majority of UK adults planning to pass on wealth in their lifetime have not considered how and when to do this, according to research from St. James’s Place (SJP), meaning their loved ones could miss out on funds.

SJP’s intergenerational wealth research1 highlights the plans and concerns of both the givers and recipients of personal wealth transfer. The research analysed those aged between 55-85 with £50,000 or more in investable assets, to understand what steps they’ve taken to prepare for passing on their wealth. The research also looked at the perspectives of those aged 18-70 expecting to receive a gift or inheritance in the next five years. 

Procrastination for passing on wealth plaguing over 55s 

While 41% of those aged 55 to 85 intend to pass on an average of £192, 319 to loved ones, just over a quarter (27%) have actually thought about both how and when to transfer their wealth. 

 
 

A significant proportion have given less consideration to the process. Nearly a quarter (23%) have given no thought to how and when they would transfer their wealth, while others have started thinking about the process, yet key considerations remain to be addressed:

  • 15% have thought about when to transfer but not how
  • 14% have decided how to transfer but not when

Claire Trott, divisional director for retirement and holistic planning at St. James’s Place, comments: “Thinking about how and when to transfer wealth, and how to maximise funds to pass on, can feel daunting. There’s a lot to consider – from investing wisely and ensuring you’re using the appropriate vehicles and minimising tax liabilities, to choosing who it goes to and in what proportions. 

“This is particularly important during the current economic environment as finances are stretched and decisions need to be made with these conditions in mind. It can be tempting to gift within your own lifetime so you can see loved ones benefit, but care needs to be taken to ensure you still keep sufficient wealth to protect yourself for your own lifespan too. It’s therefore important that plans take all of this into consideration, are not left too late, and are also reviewed on a regular basis, otherwise loved ones could miss out on funds.”

 

Majority have not discussed plans with loved ones

SJP’s research also reveals that the majority (54%) of those planning on transferring wealth have not discussed it with the intended recipient, including 14% who have no intention of doing so. Similarly, among those expecting to receive wealth in the next five years, one in two (54%) have also not had a conversation with the giver about this.­­

Conversation is key to easing concerns and smoothing processes

 

Recipients who have had discussions about the money that will be passed on to them speak of the benefits and crucial action it has prompted. A fifth (22%) now have a closer relationship with the person gifting wealth, and 19% feel less concerned about their finances following the discussion, while a quarter (24%) were able to take proactive steps and map out a plan for how the wealth would be transferred. Furthermore 16% say it prompted them to get financial advice. 

Meanwhile 14% of those intending on passing on wealth report that having such discussions made them realise they should have started planning for the transfer sooner. 

Matthew Sellens, of Crown Wealth Consultants and SJP’s Chartered Financial Planner of the Year, said:“People can feel uncomfortable talking about wealth and inheritance, but having those conversations is crucial. Discussing intentions with loved ones ensures everyone is on the same page, understands each other’s circumstances and makes planning easier. Having these conversations as early as possible will also help the process. 

 

“Passing on wealth to the next generation can be complicated and require careful planning, and it’s therefore advisable to take financial advice to help with decisions. There are different options available to protect wealth from certain taxes that would diminish the value of any assets that are passed down, such as pensions and trusts. Holistic financial planning can help navigate these areas, and get the best possible outcome for both the person passing on wealth and the recipient.”

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