Wealthier families failing to use basic inheritance tax planning
Many families face being left with large bills on the death of their loved ones because they have failed to use basic inheritance tax planning strategies.
That was the conclusion of a study by Canada Life International. Despite having enough wealth to face a potentially high IHT bill, many respondents said there was no need for estate planning.
Researchers said this suggested more education was needed about the benefits of IHT planning and something advisers had scope to start discussing with their clients.
Some 70% of those with no intention of writing a Will or setting up a trust said there was no need, rising to 76% of those with no intention of taking out life insurance.
Some 17% of respondents said that setting up a trust was too complicated and a significant minority of wealthy people (8%) were not even prepared to consider seeking advice on inheritance tax planning.
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Sean Christian, managing director of Canada Life International, said: "There is a worrying perception among wealthy people that inheritance tax planning is 'not for them'.
"Professional advisers have a vital role to play in educating them about the straightforward estate planning tools that can make a big difference to the amount of wealth an individual can leave to their family.
"Many people choose to leave estate planning until later in life, but the fact that the proportion of people setting up a trust barely changes with age is a worrying sign that not enough wealthy people are aware of this option for shielding their wealth.
"A lot of people also said that setting up a trust is complicated, when the reality is that – with the right advice – it can be very simple."
Jst 44% of people had life insurance, while just 12% had set up a trust to protect their wealth for their families, researchers found.
Some 27% of over 45s had failed even to have written a Will, leaving their inheritance plans unclear and meaning their wealth might pass to relatives they did not intend to provide for, under the intestacy rules.
The number of people who had written a Will increased with age, climbing to 89% at 65, from 62% of 45-54s.
However, the number of people setting up a trust and the proportion of people with life insurance declined.