Majority of women planning on leaving an inheritance unlikely to seek financial advice

Despite growing numbers of women leaving larger inheritances than men due to a higher life expectancy, new research has highlighted that 55% have no financial planning in place, putting them at risk of paying too much inheritance tax or not having their wishes fulfilled.

Related topics:  Finance News
Warren Lewis
5th October 2021
Pensioner finance

The research by Fidelity International revealed that out of those planning on leaving an inheritance, 55% of women have made no financial planning compared to 41% of men. Women are also more likely (37%) to say they don’t understand the rules around inheritance tax compared to men (25%).

Figures from the Office for National Statistics show that female-owned estates that are liable for tax have an overall net capital value of £13.6bn, while male-owned estates have an overall net capital value of £12.3bn.

The result is that female-owned estates are liable for £430 million more in inheritance tax than male-owned estates (£2.53bn vs. £2.1bn).

Dawn Mealing, Head of Advice Policy and Development at Fidelity International, comments: “Out of those who are liable to pay inheritance tax, women’s net estates are worth £1.3 billion more than men’s. Yet, almost half have done no financial planning to make sure this wealth is gifted the way they want - something isn’t adding up.

“In general, women tend to have larger inheritances as they live longer, and therefore are more likely to inherit wealth from their partner. This leaves them facing even bigger decisions as it means they are responsible for both theirs and their partner’s wishes, and without help from an adviser they could find themselves lost.”

By not having any financial plans in place, women are not just more at risk of paying too much inheritance tax, but also not having their wishes around how their wealth is passed on fulfilled.

An example of this is the difference between how women and men plan on distributing their wealth. 64% of women plan on giving their money to adult children, compared to just 56% of men, while men are twice as likely to gift money to their parents than women (18% vs. 9%).

Women are also less likely to make plans in the short term in order to reduce their tax liability in the future. Despite 19% planning on gifting part of their wealth to family or friends in the next 5 years, 53% are unaware of the rules around giving money away at least seven years in advance in order to avoid paying inheritance tax on certain amounts.

Dawn concludes: “Inheritance tax is a subject that often confuses people, with various rules around exemptions, gifting assets, and the amount you should pay. However, from an emotional perspective, it also means that by not seeking advice you may not be able to give as much to those that matter most to you, or in the way you want. By discussing your plans with a financial adviser earlier on, you could avoid paying too much tax and be safe in the knowledge that your estate will be handled as per your wishes.”

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