Inheritance tax: Financial advisor provides advice
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This could be costing them thousands of pounds, an expert has warned. It comes as wealth company Brewin Dolphin has commissioned a survey to coincide with Talk Money Week which starts today to encourage Britons to open up about their inheritance wishes.
The survey polled 3,000 Britons and asked them questions about inheritance and the conversations they have with loved ones.
While 58 percent of those asked admitted that they found the subject uncomfortable, nearly a fifth (18 percent) said they shy away from it because they don’t believe they have enough assets to consider it worthwhile.
However, for nearly half the population (49 percent), getting older is the main prompt for thinking about such matters.
Other life events in the last year that have pushed people to confront it are the birth of a child or the death of a parent (both seven percent) followed by the COVID-19 pandemic or a health scare (four percent).
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When it comes to having these difficult conversations, 54 percent of those polled said their partner is the preferred person to talk to followed by 22 percent who feel most comfortable chatting things through with their children.
Worryingly, only two percent say they have discussed it with a solicitor and just one percent have done so with a financial adviser.
Menna Cule, financial planner at Brewin Dolphin said: “One of the main reasons why people don’t discuss their inheritance wishes is that they assume estate planning is not for them.
“That it is only necessary if you are very wealthy.”
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She continued: “Nothing could be further from the truth.
“Most of us would like to leave a legacy and if you want to ensure your wishes are followed, smart advice and planning is essential, whatever your circumstances.
“Many people find the idea of discussing inheritance uncomfortable, and wrongly assume that planning in advance is complicated, but if you don’t discuss things before it’s too late the situation can become much more thorny in the future, particularly if there is a blended family or if there is anything unexpected in the will.
“So this Talk Money Week we want to encourage families to sit down together and talk about their wishes before it is too late to make a difference.”
Once Britons have sat down with family to discuss their wishes it’s then absolutely vital that they talk it through with a financial advisor to come up with a seven year financial plan.
Ms Cule then recommends making the most of gift allowances to help reduce how much inheritance tax someone will have to pay when they pass away.
“You can give away £3,000 each year and this will not be subject to IHT,” she explained. “ In addition, parents can gift £5,000 to each child as a wedding gift, while grandparents can give £2,500.
“Some people will find it hard asking for money, so try and speak to your children and grandchildren to find out if you can help them with something specific, such as a new car or school fees.”
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She also recommends that for those who find it difficult to start the conversation, life events like a birth, adoption, marriage or a family bereavement can make people evaluate their own plans.
“Use these opportunities as a way of talking to relatives about how you would like to pass on your wealth,” she suggested.
Ms Cule added that it’s important to also talk about social care and how they will pay for care when they get older.
One tip she gave for starting conversations for those who find it difficult was to start a chat about family heirlooms.
“People love to hear stories about older relatives, even if they never had the chance to meet them. Talking about items that are important to you or were important to other family members can be a great way to start a conversation about estate planning.”
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