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Confusion around IHT sees increase in estate planning advice

26 March 2019

Four in five over 45s have deemed inheritance tax rules too complicated, prompting a rise in the number of people seeking financial advice.

According to Canada Life’s IHT monitor, 80% of over-45s said they believe current rules are difficult to understand, up from 77% last year. In tandem, more than two fifths (42%) say they have sought professional estate planning advice, substantially higher than the 32% of over-45s who reported doing so in 2018.

But despite the rise in demand for advice, a significant proportion are overestimating the size an estate needs to be in order to become liable for inheritance tax, Canada Life said. Two thirds (64%) of those surveyed said they believe they would need assets worth more than £350,000 to see a financial adviser. Instead of seeking advice, three in ten (30%) over-45s admitted they would take advice from a solicitor, while a fifth (19%) would turn to family and friends for help.

When it comes to planning their estate, nearly three in 10 (28%) are using their pension, while a quarter (24%) have opted for ISAs and a fifth (20%) are using a trust in their will.

Neil Jones, senior technical manager, Canada Life, commented: “It is no surprise that the current inheritance tax rules are too complicated. Despite the persistent confusion, it is encouraging to see a significant number of over-45s seeking financial advice.

“One of the most common misconceptions is that a person must have a certain estate size before it becomes worth their time consulting a financial adviser. In reality, people with estates valued at £250,000 would potentially benefit from seeking professional estate planning advice, just like those with more valuable estates. Of course, it’s not just about those who are giving the inheritance. Those who will inherit these estates also need to consider the impact on their own inheritance tax position.”

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