The great wealth transfer has forced many families to discuss and plan the division of the assets but research continues to find that inheritors will not have an equal share of the estate.
Wealth manager Netwealth surveyed 2,000 Brits and found only a quarter (28%) of those with over £500,000 ($676,735, €598,812) in investable assets plan to split their wealth equally between their children.
This is not the first time that International Adviser has reported on how Brits will share wealth between their children, as Charles Stanley found that just 55% of UK adults will divide their estate in equal measure among their children.
Parents with over £500,000 are more likely to distribute their assets unevenly as a result of their children having different approaches to money, and more likely not to split equally because they are estranged from one of their children.
The majority (70%) of parents in the £500,000+ wealth bracket planned on distributing their assets over a number of years, rather than passing it all on in a single lump sum on death. But only 58% of parents within the £50,000 – £249,999 wealth bracket intended to do the same, meaning their families would be less able to take advantage of the tax benefits of longer-term financial planning.
Worryingly, one-in-five parents (19%) haven’t openly discussed their plans for their wealth with their children, which could lead to family tensions or financial issues further down the line.
Approaching wealth transfer
Charlotte Ransom, chief executive of Netwealth, said: “Passing down wealth to the next generation can be complicated for many families. There are many important factors to consider as people lead increasingly complex financial lives. While there is no one-size-fits-all approach to how you divide up your wealth, having transparent conversations early on about individual needs and expectations, alongside professional support and guidance, can make all the difference.
“Our research highlights that wealth levels can lead to different approaches to dividing family finances. For those with larger estates, giving children different amounts is often a function of their children’s needs over time and their approach to money.
“Each family will have to consider what is right for them; however, having open discussions about wealth transfer allows for a higher likelihood of understanding and buy-in. It can also help to involve an adviser as a neutral third party who can help guide some of the decision making depending on the needs of the next generation and address potential misunderstandings ahead of time.”