Inheritance Tax  

Billions of pounds passed on each year in cash

Billions of pounds passed on each year in cash

More than £17bn in cash is left to beneficiaries in the UK each year highlighting the need for financial advice for those in later life, research has shown.

Analysis from bereavement services firm Equiniti Benefactor, published today (October 1), showed an average of £69,000 in cash was left per estate while a total of £10bn in securities — such as stocks, shares and bonds — was handed down at death each year.

The figures also showed property continued to dominate the value of assets at bereavement, accounting for 54 per cent of the total wealth with a total of £43bn left behind in 2016/17.

By comparison, securities accounted for 13 per cent while cash was about 22 per cent of all assets passed down.

Insurance policies only made up 2 per cent of goods inherited by beneficiaries while loans and other assets account for 6 per cent.

 

Stuart Simpson, head of Equiniti Benefactor, thought the figures showed the need for financial advice for those in later life.

He said: “For estates to be holding nearly £70,000 in cash at the point of death raises questions about how people are handling their finances in later life. 

“Even through the process of probate, this wealth will be eroded through inflation.”

Mr Simpson added inheritance tax could be a nasty shock for those who were not aware of their limits and the fees their loved ones might incur on wealth that was being passed down to family and friends.

Although Sarah Drakard, IFA at Cruze Financial Solutions, thought accessible safe pots of money were important for financial stability, she added that beyond short-term planning and emergency funds, clients should consider the impact of inflation erosion.

She also thought consumers should be aware of having more than the compensation limit with a single bank and the effects on their wider estate planning.

She said: “There’s no right or wrong answer for any client as long as they understand the implications, and I fear many don’t.”

But Martin Bamford, managing director at Informed Choice, thought it would be irresponsible to push a client who didn’t have sufficient appetite, capacity or need for risk into invested assets when they were happy sitting on a cash reserve. 

He said: “It’s safe to say that cash is king, especially in later life. While inflation will erode the buying power of cash over time, no other asset provides such certainty and comfort.”

Alan Chan, director at IFS Wealth & Pensions, said it the findings showed a “staggering amount” of cash being left.

He said: “In many ways IHT can be mitigated so, on the face of it, it would appear they could have benefited greatly from professional advice on estate planning.

“The trouble is many clients often leave things too late to start planning or, worse, just bury their heads in the sand. On the flipside, I’ve also had clients who are quite ok with paying IHT and feel it’s a fair tax and their beneficiaries would still be left with plenty.”