It seems that the traditional form of receiving an inheritance when a loved one has passed away is becoming old fashioned as parents and grandparents give money away during their lifetime to help children cope with rising costs, university fees or to help them buy a house.
Research by the Office of National Statistics (ONS) revealed that more than half of sums left behind in Wills are less than £10,000. Only 3.6% of adults – 1.6 million – received an inheritance of £1000 or higher between the years 2008-2010. Nearly half of these inheritances came from a parent or parent in law, and a further 22% from grandparents. Just over one in ten came from an uncle or aunt, but only one in 20 inheritors received assets from a non-relative.
The combined total of all inheritances received in that period stands at £75 billion.
Erica Pearce-Howard, Associate Legal Practitioner at Crane & Staples believes that the research suggests legacies are reduced because people are making lifetime gifts in the hope of avoiding inheritance tax whilst still helping their family in such difficult times.
A survey by Aviva found that a quarter of over 75s had given a cash loan to family members instead of leaving an inheritance.
She says “we are told that £75 billion was inherited over this 2 year period and given the amount of tax that would have been paid on such a significant sum, proper tax planning either through lifetime gifts or via a Will has never been so important”.
“Tax planning has, in the past, had a cloak of mystery and complexity surrounding it. However, with the right advice properly given people can make an informed choice as to how to mitigate the amount of tax payable upon death, from life assurance trusts to gifting out of income.”
“Of course we are always mindful of HMRC changing the rules on complex tax planning but don’t forget simple vehicles such as ISAs – which are extremely tax-efficient products and which anyone over 18 can have.
However, she also warns people to remember that the size of any potential inheritance could be reduced due to the cost of care fees in the future.
She says “one never knows what the future holds so we always recommend reviewing your affairs on a regular basis to see what can be done to protect and preserve your hard earned assets”.
For more information on Wills, tax planning, and long term care planning please contact the Private Client team on 01707 387074 or email firstname.lastname@example.org