"Advisers are well placed to get families talking about legacy plans, rather than waiting for clients to ask or for the next scheduled review."
- Sophie Hall - Wealthtime
34% of affluent retirees expect to pass on more money than they’d like when they die, according to research conducted by Ad Lucem for adviser platform business Wealthtime.
With most unused pensions due to come into inheritance tax (IHT) from April 2027, Wealthtime says these surplus legacies could leave families facing bigger-than-expected inheritance tax bills.
The findings form part of Wealthtime’s Permission to Spend report, which examines why many affluent retirees hold back from spending money they can afford.
The survey also revealed that 42% think their families would rather they enjoyed their wealth now, compared with 16% who believe their heirs would like a bigger inheritance. 21% have never discussed it or are unaware of what their loved ones would prefer.
HMRC estimates that up to 10,500 estates could become newly liable for inheritance tax in 2027/28 once pensions are included and a further 38,500 could pay more. Speculation about further pension changes continues ahead of the Budget on 28th October, but bringing pensions into inheritance tax is already law.
With the new rules now less than six months away, Wealthtime’s research found that 48% of pension holders were unaware or had only vaguely heard of them, while 23% knew of them but were unsure of the details.
Asked what they have done or are seriously considering in response to the upcoming changes, 35% of pension holders cited reviewing their will or estate plans, 31% cited taking financial advice, 28% said taking more income from pensions and 26% said bringing forward gifts.
However, adviser responses suggest few clients are raising the new IHT rules unprompted. The top changes, each reported by fewer than a quarter of advisers, were more client questions about death benefits and clients delaying decisions while awaiting clarity.
Sophie Hall, commercial director at Wealthtime, said: "Retirees who don’t feel they have permission to spend can end up leaving larger legacies than they wanted to, and from April next year that could land their families with a higher inheritance tax bill.
"With half of pension holders knowing little or nothing about the rule changes, it’s unlikely they’ll raise the subject themselves. Advisers are well placed to get families talking about legacy plans, rather than waiting for clients to ask or for the next scheduled review. Whatever the Budget brings, leaving unspent wealth should be a choice rather than an accident."
