IW&I’s research shows that a key reason is that older people significantly overestimate the length of time they are likely to require long term care: the average length of stay in a care home is two and a half years but its survey reveals that on average over 65s believe it to be five years.
The average long-term residential care bill is now over £28,000 per annum, resulting in a total cost of around £70,000. However, IW&I’s research shows that on average people expect to leave an inheritance of £282,000, four times the cost of long term care.
Furthermore, one in six (16%) people expect to leave over £325,000, from which point they are liable to inheritance tax. Almost a third (32%) of over-55s in the UK believe they will need long-term care later in life.
Nick Gartland, Senior Financial Planning Director at Investec Wealth & Investment, said:
“In our experience fears over the cost of long term care is preventing many wealthier people from carrying out inheritance tax planning. They often think, wrongly, there will be little left over once their needs have been met. As our research shows the reality is very different.”
According to IW&I many older people fail to have an inheritance strategy in place and as a result their estate becomes unnecessarily exposed to inheritance tax, which currently stands at 40%
Nick Gartland adds:
“Inheritance planning can be a difficult subject to address and there is a tendency to ignore it until it’s too late. One of the reasons families defer making decisions on an inheritance tax strategy is the perfectly reasonable concern about running out of money.
In order to make these decisions it’s important they’re fully informed about likely and realistic costs.”
