Just how many of us avoid discussing finances with our family, and why are those discussions important? In a new report, 78% of over 60s admitted they don’t have a plan in place to pass on wealth. Find out more below.
Schroders Personal Wealth has compiled a report looking into people’s attitudes towards intergenerational wealth and the results are surprising.
Despite 84% of respondents looking to pass on wealth, a full 78% admit that they do not have an estate planning strategy in place.
Family conversations around money remain taboo. 65% of people say they rarely or never discuss inheritance with their children.
At the same time, parents and grandparents are increasingly relied upon to support the family’s financial needs. 70% of over 60s support their children during the course of their lifetime.
“We believe money and finance are an important topic to discuss with children from an early age and think more families across the UK should be talking about their finances,” said Donald Gateley, Regional Director of Scotland & Northern Ireland at Schroders Personal Wealth.
“But right now, this isn’t happening. The feeling of being overwhelmed appears to be a common theme throughout our findings.
“We want to encourage families to discuss money more openly, create better awareness and give them the confidence to fully engage with each other about their financial lives and estate planning.”
How individuals plan to pass on wealth to their family
The report surveyed over 1,000 individuals over the age of 60. It was designed to build a clear picture of how people are planning to pass on wealth down the generations.
Just over a quarter said they have contributed to a house deposit.
Meanwhile, just under a fifth have put money into a savings account for grandchildren.
And 18% have of paid off credit cards or other debt
Baby boomers, those born between 1945 and 1965, hold the majority of the UK’s wealth. This has accumulated through generous final salary pension schemes, the long-term rise in the stock market over the past 12 years and the boom in house prices.
Some 72% said they would only pass on their wealth when they die. But with life expectancy increasing, the average age of inheritance is also rising. For many families these windfalls come too late in life.
The survey also sought the opinions of adults aged between 30-59 years with at least one parent alive.
Many of this age group need a boost to their finances much earlier, perhaps to move up the property ladder to a bigger family home. It could also help fund childcare costs, school fees or university tuition fees for the next generation.
Over 60s are increasingly providing financial support to their families
One of the most straightforward ways to support your family is to give away assets and pass on wealth while you are still alive.
This can be a very simple way of potentially reducing your estate for inheritance tax purposes.
Some 70% of parents over 60 reported that they have helped at least one of their adult children financially.
This trend has been accelerated by the Covid-19 pandemic.
One in five (18%) said they have had to increase financial support at some point in 2020 this year, rising to 3 in 10 (30%) for those with children aged 18-24.
It is also clear that many families are failing to communicate about finances. Some 65% said they rarely or never discuss inheritance with their children.
The study shows that the ‘Bank of Mum and Dad’ comes to the rescue frequently.
The over-60s are increasingly finding they are also needed as the ‘Bank of Grandma and Grandpa’. They help fund things such as childcare costs, school fees or university tuition fees for their grandchildren.
Why estate planning and open discussion about finance is important
Perhaps the most striking statistic from the report is that 78% of people surveyed have no estate planning in place.
Forming these plans and making the next generation a part of the process could mean that family goals are more easily achieved.
If you can comfortably discuss money together, this could potentially improve financial wellbeing.
Knowing what family members can (and can’t) expect could help them better plan for the future and give them peace of mind.
Need help to decide the best way to pass on wealth? Find out more about getting personalised financial advice from Schroders Personal Wealth. Fees and charges apply.
