Most Over-55s Haven't Prepared Wealth Transfer Plans – Report

Amanda Cheesley Deputy Editor London 14 July 2023

Most Over-55s Haven't Prepared Wealth Transfer Plans – Report

UK wealth manager St James's Place released new research this week looking at what steps people aged between 55 and 85 have taken to prepare for passing on their wealth.

The majority of UK adults planning to pass on wealth in their lifetime have not considered how and when to do this, according to research from St James's Place, meaning that people close to them could miss out on funds.

SJP’s intergenerational wealth research highlights the plans and concerns of both the givers and recipients of personal wealth transfer. The research analysed those aged between 55 and 85, with £50,000 ($64,000) or more in investable assets, to understand what steps they’ve taken to prepare for passing on their wealth. The research also looked at the perspectives of those aged 18 to 70 who expect to receive a gift or inheritance in the next five years.

While 41 per cent of those aged 55 to 85 intend to pass on an average of £192,319 to loved ones, just over a quarter have actually thought about how and when to transfer their wealth. A significant proportion have given less consideration to the process, the firm continued. Nearly a quarter have given no thought to how and when they would transfer their wealth, while others have started thinking about the process.

Claire Trott, divisional director for retirement and holistic planning at St James’s Place, said: “There’s a lot to consider – from investing wisely and ensuring you’re using the appropriate vehicles and minimising tax liabilities, to choosing who it goes to and in what proportions.”

“This is particularly important during the current economic environment as finances are stretched and decisions need to be made with these conditions in mind. It can be tempting to gift within your own lifetime so you can see loved ones benefit, but care needs to be taken to ensure you still keep sufficient wealth to protect yourself for your own lifespan too,” she added. “It’s therefore important that plans take all of this into consideration, are not left too late, and are also reviewed on a regular basis, otherwise loved ones could miss out on funds,” she continued.

SJP’s research also reveals that the majority of those planning to transfer wealth have not discussed it with the intended recipient, including 14 per cent who have no intention of doing so. Similarly, among those expecting to receive wealth in the next five years, one in two have also not had a conversation with the giver about this, the firm said.­­

Conversation is key to easing concerns and smoothing processes
Recipients who have had discussions about the money that will be passed on to them speak of the benefits and crucial action it has prompted. A fifth now have a closer relationship with the person gifting wealth, and 19 per cent feel less concerned about their finances following the discussion, while a quarter were able to take proactive steps and map out a plan for how the wealth would be transferred. Furthermore, 16 per cent say it prompted them to get financial advice, the research shows.

“Passing on wealth to the next generation can be complicated and require careful planning, and it’s therefore advisable to take financial advice to help with decisions. There are different options available to protect wealth from certain taxes that would diminish the value of any assets that are passed down, such as pensions and trusts. Holistic financial planning can help navigate these areas, and get the best possible outcome for both the person passing on wealth and the recipient,” Matthew Sellens of Crown Wealth Consultants and SJP’s Financial Planner of the Year, said.

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