Inheritance Misconceptions

We recently came across a few statistics released by wealth manager Charles Stanley about inheritance. The general conclusion drawn from the research is that there are a lot of misconceptions when it comes to inheriting. Theconducted research on 20-30 year olds about being beneficiaries as well as older people on leaving money. We thought we would cover these stats as they pertain to investing.  

First here are the main statistics found on beneficiaries. The average young person expects they will receive around £130,000 inheritance whereas the actual average is only £11,000. By extension this massive overestimation reflects in what they plan to do with their inheritance. 22% of millennials asked said they wanted to use their inheritance for a deposit on a house only 7% of them said they will use the money this way. In terms of expected timescale, 1 in 7 younger people believe they will inherit money around the age of 35 when typical inheritance age is around 55. So, in summary most young beneficiaries think they will get more money, earlier than they most likely will. The main conclusion we can make from this information is that inheritance cannot be relied upon to get onto the property ladder! Their research supports this as the majority of money for first-home deposits come from savings or investment.  

Despite the majority of people not understanding the potential of inheritance more people than ever are relying on it, which is even more surprising as life expectancy has plateaued slightly also. In fact, £5.4 billion was paid in inheritance tax last year, up £164 million on the year before which was also a record year. Many financial advisors state that this is because less people are planning ahead to limit this tax. For example, 30 million people in the UK currently don’t have a will. Amazingly this article claims that, even when people have organised their will, 63% haven’t told their beneficiaries what they plan to leave them. This aggravates all the problems in this article as assets like houses are often forgotten and if not, then the property’s price growth is not consideredAll of these factors will increase the amount of tax owed.  

So, in summary if you are aged between 20-30 you can’t rely on inheritance! 39% of people worry that they will not be able to leave anything in their will, so if beneficiaries didn’t need their inheritance for financial freedom then there would be less need to worry for everyone. However, it is important to sort out your will and make sure your beneficiaries are aware of your plans. This will maximise the amount you will leave. If you want to learn some basic investing strategies that you can rely on then go onto the ‘Money Mum’ website and if you want to learn how to invest in property then go on one of our 3-day courses. 

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