Concerns around inheritance are preventing people from remarrying, new research from Rathbones has revealed.
More than one in three (35%) people with blended families say worries around inheritance have made them less likely to remarry, compared with 26% of people in families without children from previous relationships.
According to the latest ONS Census figures, there were 781,000 step-families in England and Wales in 2021, including 547,000 with dependent children. Around 1.1 million dependent children lived in a step family.
However, many of these families face an inheritance ‘fairness gap’, says Rathbones. More than a quarter (26%) believe their inheritance plans are fair but say their partner disagrees, almost double the 14% among families without children from previous relationships.
Almost half (48%) of blended families describe inheritance planning as complex, compared with 35% of families without children from prior relationships, while 26% have experienced family conflict relating to inheritance planning.
Malvee Vaja, chartered financial planner at Rathbones, said: “Blended families can face a particularly difficult inheritance balancing act. People often want to make sure a new partner is financially secure while also protecting an inheritance for children from a previous relationship and those aims do not always sit neatly together.
“You could almost think of it as an ‘inheritance pre-nup’ conversation. Couples entering a new marriage may increasingly need to talk openly about what happens to their wealth, how they want to provide for one another and crucially, what they ultimately want their children to inherit.”
Rathbones said while 85% of families without children from previous relationships intend to divide their inheritance equally among their children, this falls to 73% among blended families. Almost a quarter (24%) of people in blended families also feel guilty about how they intend to divide their inheritance between family members, compared with just 13% of families without children from previous relationships.
The research also suggests that upcoming inheritance tax changes, which will see the inclusion of pensions in estates from next April, are prompting some blended families to revisit their arrangements. Almost a third (32%) have reviewed their will, compared with 22% of families without children from previous relationships. Nearly a quarter (23%) have adjusted their pension drawdown strategy, versus 18%, while 23% have established or used trust structures, compared with 14%.
Vaja added: “We’re seeing growing interest from clients in passing wealth down sooner, particularly to help children and grandchildren with university costs or getting onto the housing ladder, when the money can make the biggest difference.
“But there’s a balance to strike. You don’t want to give away money today that you may need for retirement or care tomorrow. The priority is to plan early, using existing allowances sensibly and avoid knee-jerk decisions driven by tax.”
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