Inheritance Tax Warning Because Confusion ‘Endangers Family Patrimony’ – Act Now | Personal Finances | Finance
Inheritance Tax (IHT) is payable on the value of an estate above a certain threshold – typically Â£ 325,000 – when a person dies. This is just one of the many financial issues that people will face when their loved one passes away, and the issue can often be complex and time-consuming. However, in this regard, the British are warned of the misunderstandings that arise when it comes to inheritance and how these could jeopardize the finances of all involved.
A glaring lack of frankness on the subject of inheritance increases financial confusion, according to a study of Netwealth wealth managers.
Research has shown that 65% of parents think their children have a clear understanding of their legacy plans, but only 39% of young adults agree with this sentiment.
To complicate matters further, succession plans still remain taboo among Britons, with just 23% of young adults having open conversations with parents about their intentions.
Lack of openness, according to the study, means families will lose the long-term benefits of family financial planning and put their wealth “at risk.”
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âEnsuring that finance is a topic of discussion within the family unit can help educate and build confidence in the next generation.
“By having these transparent conversations, family members are empowered to make financial decisions that will be of great benefit to them in the future.”
One question that can often be confusing is who a person chooses to bequeath their estate to upon death, and if expectations don’t match eventual reality, it can cause problems.
Research found that only half of parents planned to share their wealth equally among their children, citing a desire to equalize financial support previously provided, with some people having more responsibilities and a lack of confidence as the reasons.
But the risks are also short and long term, with the report warning that a lack of communication between parents and adult children could have an immediate impact.
This is because 65% of those surveyed said they plan to make significant wealth transfers in installments over several years rather than all at once upon death.
Despite this, only a quarter of young adults are aware of their parents’ financial plans, meaning they could make important decisions about their future without knowing their eventual inheritance.
As a result, Netwealth encouraged Britons to know their âfinancial tribeâ – how they approach financial and financial matters.
These are cited as: the lifestyle lover, wealth skeptic, head-in-the-sand dodge, big spender, generous donor, calculated risk-taker, and self-sufficient saver.
Emma Maslin, financial coach, concludes: âEvery opportunity in life we ââface is filtered through the lens of our unique money personality – or ‘financial tribe’ – but we often assume that others think of money the same way we do. we.
âAdd to that a lack of communication between the generations and there is a lot of room for misunderstandings and potential surprises later on.
âBy taking the time to truly understand the ‘financial tribes’ of our individual and respective family members, we can leverage the benefits of our different financial personalities for ourselves and for the family as a whole when planning. of the future. “