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Millionaires’ fears re later life creating ‘Heirs but not Beneficiaries’

4 March 2019

Research from Canada Life has highlighted the fear among the relatively wealth that they will find it difficult to leave anything for future generations, as a result of increasing longevity and the cost of social care. 

The survey, part of Canada Life’s 2019 IHT monitor, showed that nearly a fifth of millionaires aged 45 (18%) expected to spend all of their money in retirement, creating a generation of ‘Heirs but not Beneficiaries’.

Millionaires also were slightly more likely to spend all of their funds in retirement than those with lower value assets, Canada Life said.

When asked about their key financial concerns, close to half (42%) of those with an estate worth £1million or more, said they were worried about giving away funds they would need in retirement – significantly higher than the overall average (29%). A third (33%) reported feeling concerned that they did not have enough saved in pensions to cover their own retirement.

Neil Jones, ican technical manager, Canada Life, said: “The fear of not having enough for later life is something that is universally shared – regardless of your level of wealth. The potential upshot is that anyone who is relying on receiving a significant inheritance should be wary – it simply may not happen.”

Jones said there were plenty of ways for those in possession of large funds to gift away part of their wealth in life, including trusts, such as a flexible reversionary trust or discounted gift trust and save on inheritance tax, while retaining some access if needed.

He added: “The use of trust-based solutions can help with retirement and long term care provision and allow the ability to pass what money is available down through the generations.”

The survey was carried out amongst 1,002 UK consumers aged 45 or over with total assets exceeding the standard nil rate band of £325,000.

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