Millennials ‘misjudging inheritance windfall’

The majority of millennials are misjudging the amount of inheritance they will receive and when they expect to get it, wealth manager Charles Stanley has found.

Their new survey suggests young people on average expected to receive nearly £130,000 from relatives when they die, when if fact the median amount handed down was only £11,000

Similarly, one in seven millennials expected to inherit the month before they turned 35, although in reality the typical inheritance age is between 55 and 64.

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There are also unrealistic expectations about what an inheritance can go towards. At least 22% of millennials planned to use any money to go towards a deposit on a house, although official statistics suggest only 7% actually did so.

“People are living longer than ever, so relying on an inheritance to get on the housing ladder is a risky strategy as you may get less, and much later than planned,” said John Porteous, from Charles Stanley.

“In reality, most people save and invest to get on the housing ladder. Starting early and planning ahead is essential to achieving the deposit you need,” he added.

“Having said that, more people are inheriting,” says Your Money. Inheritance tax receipts in the UK hit a record high of £5.4bn in the 2018-19 tax year, up £164m or 3.1% on the previous 12 months, which was also a record.

The Financial Times says “many professional advisers and financial services companies have been quick to point out that this is a result of many families failing to do sensible planning to reduce or avoid the tax”.

“While that may be true to an extent, it also reflects the fact that assets, particularly housing, have grown substantially in value over the past decade,” says the paper.

This has prompted concern many in the UK are neglecting planning for death, with up to 30 million people currently without a written will.

Separate findings from Canada Life published this week reveal a staggering 63% of people aged 45 and over have not told their beneficiaries how much inheritance they plan to leave them.

“The shock figure highlights an ongoing uncertainty of how much money is really needed to fund later life and confusion surrounding how inheritance tax works,” says the Daily Express. A huge concern for over-45s is using all their assets to fund their retirement, with 39% worried they will have nothing left to give their family.

The BBC report the government “is planning to substantially increase the cost to bereaved families of settling the estates of deceased relatives”, however, the changes which were expected to start last month have been delayed.