The age at which clients seek advice on inheritance tax and estate planning has fallen, but many are still leaving it too late in their planning journey, say advisers.
New research from investment manager Downing shows 84% of advisers and wealth managers say the average age at which clients first contact them about inheritance tax and estate planning has fallen over the past year.
This includes more than a quarter (27%) who say the average age has dropped considerably, as demand for support surges.
Despite this, more than two thirds (67%) of advisers believe clients still wait too long to address the issues. On average, advisers begin engaging clients on estate planning when the client is 46 years old, however, 39% of advisers say they begin engagement when the client is past 50.
Advisers and wealth managers estimate that more than a quarter (27%) of their client base has a potential inheritance tax liability and 42% say they proactively contact clients about both inheritance tax and estate planning. A further 32% say they rely on a combination of proactively contacting clients and waiting for clients to raise the issue, while 26% leave it up to clients.
Despite inheritance tax gaining traction recently, driven by a combination of higher inheritance tax receipts and upcoming changes to policy, nearly half (47%) of advisers say clients are unaware of the need for inheritance tax and estate planning. Around two in five (39%) said clients are unaware of the upcoming inclusion of pensions in estates, while 35% said clients have limited awareness of how trusts can be used as part of wider estate planning strategies to pass on wealth efficiently. A further 31% admitted clients do not have wills.
Rebecca Ward-Howes, head of product at Downing, said: “The biggest risk in estate planning is often delay. That risk is only growing: Business Relief reforms are already changing the picture, and from April 2027, unused pensions will be pulled into the IHT net for the first time, catching out many families who assumed their pension was safe from IHT.
“It’s encouraging that clients are engaging with advisers earlier than before but our research shows many are still waiting until their options have narrowed. As more families find themselves exposed to potential IHT liabilities, early engagement and clear planning have never been more important.”
Main image: volant-D4d0dCYpFdw-unsplash
