The vast majority of wealthy Brits are “woefully unprepared” when it comes to having a full inheritance plan in place, according to a new study.
Less than a quarter of high net worth individuals in the UK do not have a complete plan in place for how they will pass their assets on to the next generation, the report from RBC Wealth Management found.
As many as 30 per cent of the 816 Brits questioned between June and August last year said they had done nothing to prepare for the transfer of their estate when they die.
RBC, which surveyed a total of 3,105 individuals across the UK, Canada and the US with an average net worth of $4.5m (£3.6trn), also found this lack of estate planning continued through the generations.
These findings come after inheritance tax receipts hit a record high in the past financial year, with HM Revenue & Customs gathering £4.6bn from British taxpayers.
Family discussions around estate planning can be daunting, meaning they are often put off until it’s too late Tony JohnsonRBC found that just over a third of the UK respondents had discussed the reasons behind their wealth transfer plans with their benefactors before they inherited assets themselves.
While $4trn (£3.2trn) of wealth is expected to pass to the next generation over the next few years, Tony Johnson, head of sales and relationship management at RBC Wealth Management, said inheritors are being “left in the dark” by their parents.
This, he said, leaves younger generations at risk of being unprepared to protect and grow that wealth for the future.
Mr Johnson said the British stiff upper lip is part of the problem, and urged savers to break this “cycle of unpreparedness” when it comes to discussing the wealth transfer.
“Family discussions around estate and succession planning can be daunting, meaning they are often put off until it’s too late, which may result in damaging consequences.”
RBC's head of sales said open conversations, financial education, and advance planning are “critical” to protecting the future of estates and assets that families have built.
Yet Julian Washington, the firm’s head of intermediary relationship management, said there are encouraging signs that high net worth Brits have a healthy appetite for self-education.
According to the RBC report, 64 per cent had conducted their own research and 46 per cent had managed their own investments to improve their financial understanding, which is higher than both the US and Canada.
Mr Washington said self education will stand these individuals in good stead, but urged Brits to pursue more structured education from financial professionals and experts.
Blair Cann, certified financial planner at M Thurlow & Co, said: "Congratulations to any IFA who can persuade any of the younger generation to do anything about inheritance tax; they are simply not interested."
He said the main problem is choosing what trust to use and what to put in it, adding: "Many older people simply shrug their shoulders and say there will be plenty for the children anyway.
"I agree it is a problem area but it is difficult to get those likely to be hit by it to do anything unless the sums are very significant."
