Despite the slight increase in the uptake of Will creations in UK adults, the majority of UK families could still be faced with unnecessary Inheritance Tax (IHT) bills.
According to a recent report, conducted by over-50s financial firm Saga, the UK’s reluctance to adequately plan for their death is causing the families left behind to suffer financially with only 11% of respondents actively using estate planning services.
The saga report found that 63% of respondents did not have a valid will in place. Whilst the amount of over 50s with a valid will rose to 60%, there is still a clear neglect or reluctance from a huge section of society.
40% of the respondents under the age of 50-years-old stated that they had no intention of writing a will in the near future with only 15% of this age bracket having a will in place.
Even though more people over 50-years -old are creating a will to ascertain what will happen to their estate, very few people are planning to protect their grieving relatives from liabilities the estate may accrue.
It is estimated that around 280,000 families per year will be forced to pay higher probate fees under the new structure, with half of these being lumbered with paying over £2,500. This means that over £140,000 estates per year will be worth more than £500,000 and will be liable for IHT.
According to the report, only 11% of respondents have undertaken estate planning advice with 56% unwilling to consider consulting a professional to help them minimise their IHT contributions.
This issue was highlighted recently in published probate records of the estate of the late comedy legend Caroline Aherne which revealed that her grieving mother had to cope with the stress of dealing with a bill amounting to £71,000 because of her tragic loss.
The nation mourned one of Britain’s best-loved comedy actresses and writers in the summer of 2016 at the age of just 52 following a life-long battle with cancer. Caroline was a single woman with no children but had made no will when she passed away, meaning her estate was inherited by her next of kin, which was her mother, to whom she was very close.
Miss Aherne’s estate was valued at just over £500,000. Due to being single at the time of her death, her estate met the qualifying conditions of a Nil Rate Band allowance.
Whilst the bank may have released the money directly to pay the IHT bill, the lack of planning would have caused additional and avoidable stress to an already difficult situation.
Jeff Bromage, Managing Director at Saga Personal Finance said:
“The lack of engagement and awareness surrounding estate planning and wills is worrying. Only 15% of under 50s have written a will, and while this rises to 60% of the over 50s, just 11% of the population has conducted estate planning to manage the inheritance tax levied on their estate upon death.
“With a quarter of people who plan to leave an inheritance already cutting costs in order to increase the amount of money to be left to their beneficiaries, there is a deeply concerning lack of understanding surrounding what individuals can really do to better mitigate against inheritance tax. On top of this, with the stealth death tax creeping in, beneficiaries of estates over £50,000 will be hit even harder by new tax.”
Death remains a taboo concept with huge sections of the population. Whilst there may be a considerable increase in people over 50-years-old making a will, it is clear that more people need to consider the importance of estate planning to ensure that grieving families are not left to deal with the complex issues surrounding IHT.
Do you find that families being burdened with IHT is a common occurrence? Are more people using estate planning services to minimise the impact on their families?
