Talking frankly about finance is one of those difficult conversations in many families. In fact, more than half of parents (57%) haven’t spoken to their adult children about their will, according to new research by Scottish Widows.
Ahead of Talk Money Week, the leading UK insurer has surveyed attitudes towards long-term planning and found many people haven’t yet had those important conversations about finances with their loved ones. The new research shows nearly a quarter (24%) of adults haven’t discussed making a will with their partner or spouse, while almost a third (31%) were unsure if they understood the long-term benefits of putting their assets into a trust or finalising a will. Putting assets into trust is one of the best ways to minimise the likelihood of paying Inheritance Tax, or finding that the Council is demanding the sale of the family home to pay for care home fees.
Scottish Widows is urging people to put plans in place for the future or face leaving their loved ones with thousands of pounds worth of costs and inheritance tax. The survey also revealed one in two (49%) adults admit talking about long-term finances, especially in the event of death, with family members is difficult.
WILLS & STUFF IS A BIT AWKWARD
When it comes to discussing wills and trusts with adult children or dependents, over two-thirds (69%) of parents say they feel responsible for the financial wellbeing of their children if they were to pass away. Despite this, 57 per cent admitted they haven’t talked to their children about long-term finances, while nearly one in 10 (9%) parents said they weren’t sure how to approach the topic.
The survey finds 47 per cent of people have their children down as a beneficiary of their will – higher than other forms of support, such as a deposit for a house or flat (19%), a savings pot with regular contributions (16%), or covering the cost of transport, such as a car (15%).
Scottish Widows is urging parents and guardians to make formal arrangements so that upon their death the appropriate plans are in place to ensure the people they wish to benefit from their estate will do so, with the estate settled as quickly as possible and with minimal inheritance tax. If there is no will, the deceased’s estate will be distributed under the terms of law, which may not align with their loved one’s wishes. Getting the right professional advice and setting up a financial plan can ensure you are best able to look after your family when the time comes.
If people are not married, or in a Civil Partnership, the situation can be very difficult after the death of one person. In fact the children of the relationship may find that a large portion of an estate goes to the immediate relatives of the deceased – not them.
Rose St Louis, Protection Director at Scottish Widows, said: “While our research found that two-thirds of adults (69%) understand the long-term benefits of finalising trusts and wills, it still leaves many who don’t. We know people might put off talking about creating wills or trusts, possibly because it doesn’t seem a priority or they find it a difficult situation to think about.
“Broaching these tricky topics with clients when appropriate is key to ensuring people’s wishes will be met, giving them peace of mind. The good news is over half of those (57%) we spoke to believe it’s important to seek financial advice when it comes to long-term financial planning, further highlighting the huge role advisers have in helping people plan for the future.”
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