A report from The Progeny Group in conjunction with YouGov, found that two thirds of the population intend to pass on wealth to their children or grandchildren, but most don’t have a plan. Of those surveyed, those aiming to provide financial support or inheritance to loved ones (49%) didn’t know what that might look like, or how they would do it.
Over the next 30 years, a record £5.5 trillion will be passed from the Baby Boomer generation to the Gen X and Millennial generations. For many, not having a plan in place could leave a lot of people with a rather hefty tax bill. 58% of Baby Boomers said they had discussed inheritance or gifting with their loved ones, probably for this very reason. But for Millennials and Generation X, this wasn’t a topic they enjoyed, with 41% reporting that it made them uncomfortable.
This, along with differing values, attitudes and priorities led to 1-in-4 Baby Boomers reporting that they didn’t trust the younger generation to use their inheritance wisely. Yet 45% of Generation X and Millennials felt confident about making use of any received inheritance.
When asked how they planned to use this money, the youngsters’ popular answers were building their savings pot (35%), funding their retirement (29%) and paying off their mortgages (25%). Additionally, 1-in-10 wanted to use their inheritance to leave a further financial gift in their Will for their family.
Looking at the responses, it seems evident that a lack of communication and planning has resulted in mixed expectations from both sides, with neither party clear on what to do for the best. For those in the estate planning industry, this is a familiar conundrum! However, this time and, certainly over the coming years, there’s far more money at stake.
Families that plan together and communicate more openly are more likely to get better outcomes, and fewer Wills are likely to be contested. Estate planning professionals know this, as well as the importance of putting a Will together in the first place.
It seems, now more than ever, with so much money at stake, that estate planners have a heightened burden of responsibility to encourage and support more families with their estate planning and to urge better communication between them early in the process. The ability to spend less time on admin and focus more on client advice will be paramount. Ensuring that clients and their families understand the options and ramifications is key. As well as having a Will in place, helping your client put together an Expression of Wishes document setting out what they want and their reasons for their decisions which can be referred to in the future could be wise too. As a trusted adviser you could be a key facilitator providing a forum for a family’s estate planning discussions as well as your invaluable advice and support.
Download the full report here.