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Inheritance planning on the rise, but still often the elephant in the room

7 Nov 2018

While inheritance tax receipts have risen significantly over the past year, research from the annual Cicero Inheritance Tax (IHT) and Estate Planning report, supported by Octopus Investments, reveals that estate planning is still a missed opportunity for many financial advice firms. The report, which analysed views among UK financial advisers and consumers aged over 55, reveals that despite the increased focus on IHT and client demand, many advisers still avoid raising the topic.

Figures show that a growing proportion of adviser clients have investible wealth of over £1 million but generational planning is still not a subject being brought up consistently. Advisers say that over a quarter of their clients (28%) should have considered IHT and estate planning but haven’t as of yet. Half of clients aged over 55 and over the IHT threshold say they still haven’t had a conversation with their adviser about IHT and estate planning, even though they want and expect to. And advisers themselves admit that in more than a third of cases written (35%) it was the client who initiated the conversation.

Despite this, inheritance planning now accounts for nearly one-fifth of all firms’ revenues, up from 14% in 2017, and advisers are increasingly likely to feel it is a critical or important part of their advice proposition (76% up from 63% last year). This year advisers have carried out some form of IHT planning for 34% of their clients – up from 18% last year.

Paul Latham, Managing Director of Octopus Investments, said:

“With rising numbers of people being subject to inheritance tax, particularly in areas where property prices have risen sharply, it’s fundamental for people to consider estate planning. The research shows that while inheritance tax planning is on the rise, more conversations need to be had to ensure people can pass on as much of their wealth to the next generation as possible.”

Other figures from the report show that a majority of advisers (58%) consider Business Property Relief (BPR) investments as an appropriate solution for the right clients who are happy to take more risk with their wealth, while minimising IHT, without losing tax benefits or asset control. Nearly three-quarters of advisers (73%) expect to recommend more BPR qualifying investments over the next year.

For journalists in their professional capacity only. The value of an investment, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest. Personal opinions may change and should not be seen as advice or a recommendation. We do not offer investment or tax advice. We recommend investors seek professional advice before deciding to invest. Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London, EC1N 2HT. Registered in England and Wales No. 03942880. Issued: November 2018