Only half of parents plan to leave their wealth split equally between their children, according to a new report.
The findings by Netwealth and The Money Whisperer® as reported in the Mirror suggested that there is a lack of openness around inheritance that can leave bereaved families at a loss when it comes to their finances.
In particular, the report found a lack of understanding between parents and young adults about the family finances and expectations about those children might or might not receive. The study looked at the different financial ‘tribes’ (i.e. people’s attitudes towards money) and how that affected inheritance decisions and the approaches they took.
Different attitudes to money
Different attitudes, the report noted, brought added psychological complexities to families dealing with their money matters, especially when coupled with poor inter-generational communications.
The report’s most startling finding was that just over half – 53 percent – of parents plan to split their wealth equally among their children, with two thirds of parents (66 percent) saying their children had a clear understanding of these intentions, but only 39 percent of young adults agreeing that they knew their parents’ plans.
The problem is exacerbated by taboos around money discussions. Less than a quarter of young adults (23 percent) have had opens discussions about what is going to happen in the future with their parents. In addition, almost a third of this age group (30 percent) admitted they’ve done little to ensure their own family’s mutual financial security in the future.
Different inheritance laws
Inheritance laws in the UK differ in England and Wales, compared to Scotland. In the first two, there is no forced heirship, so that people are free to leave their property to whomever they wish when they make their last will and testament.
In Scotland, however, a surviving spouse and children have a statutory claim to parts of the estate. If the person who has died had a spouse and children, both parties are entitled to receive a third each (one-third split equally between children if more than one) of the net assets (everything excluding property and land). If the deceased has left behind only a spouse or children, they are entitled to 50 percent.
According to Netwealth and The Money Whisperer®’s findings, another two thirds of parents (65 percent) plan to make substantial wealth transfers in instalments to their heirs over several years, rather than handing over inheritances in one lump sum when they die. But with only a quarter (28 per cent) of young adults aware of their parents’ plans, those young adults could be planning their futures without the relevant information they need to make informed decisions.
A total of 47 percent of parents don’t plan to distribute their wealth equally among their children. Reasons given for this include evening up previous financial support (15 percent) or that certain children have different financial responsibilities and therefore more need of support (14 percent). Trust is another issue, with 13 percent of parents saying the child they trust with money will receive more of the inheritance.
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This article was submitted to be published by Finders International as part of their advertising agreement with Today’s Wills and Probate. The views expressed in this article are those of the submitter and not those of Today’s Wills and Probate.
