Most over-55s still not thinking about estate planning

22 May 2019

Rising house prices and a freeze on the inheritance tax (IHT) threshold mean that more and more estates are being drawn into the IHT net.

Estate planning is a way of legally reducing or entirely mitigating the IHT liability on your assets. But new research shows that most over-55s aren't using even the simplest of solutions -- such as gifting and trusts -- to reduce the potential IHT liability on their estate.

Canada Life found that just over a third (35%) of UK adults aged 55+ have given or plan to give gifts that they would have otherwise left as an inheritance. The remaining two-thirds (65%) say they have not and do not plan to.

Higher earners are most likely to have estates that are liable to IHT. But even among those with an income of over £45k, almost two in five (38%) have not given gifts and don't plan to in the future.

Gift and spousal exemptions, charitable donations and various forms of business relief are among the planning methods commonly used to reduce or eliminate IHT liability.

"With the wide range of planning solutions now available, there is no reason why benefactors can't maximise the value of their estates that are passed on," said Neil Jones, wealth management and tax specialist at Canada Life. "But our research and rising inheritance tax receipts show many people are simply not taking advantage of these opportunities.

"It's crucial to use your reliefs, exemptions and allowances. Starting any planning early is essential and there's a range of trusts available that can enable you to make sure more of your money goes to your beneficiaries whilst reducing the amount of tax payable when you die. Re-ordering the way you disinvest can also bring about significant benefit from an estate planning perspective.

"This area of financial planning is complicated and there is no substitute for seeking out the help of a professional financial planner."

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