A survey by Aviva has found that nearly two-fifths (37%) of people expecting an inheritance from their parents say their own finances depend on it. However, three-fifths (60%) of those expecting to receive something do not know how much money they are likely to get.
Financial decisions based on assumptions
The insurer said the research raises concerns that many households could be making important financial decisions based on assumptions. This could be particularly the case where an inheritance is expected to help pay for everyday living costs, clear debts and fund their own retirement.
Some people said an inheritance will help them pay off their mortgage, while others said they would use the money for their children's education.
Wills and power of attorney
The survey also indicated that only around a third (32%) of people have an up-to-date will and know where it is. Seven percent said their will is up-to-date but they do not know where it is, while one in 10 (10%) said their will is out of date.
Only 13% of adults have a power of attorney in place, rising to 17% of those aged 65 to 74 and a third (33%) of over-75s, the survey of 2,000 people across the UK carried out by Censuswide in January indicated. A power of attorney allows people to help deal with aspects of another person's affairs.
Expert comment
Lorna Whalley, director of Aviva's adviser platform, said: “The research shows that there is an absence of family discussions around inheritance and expectations which could have repercussions, especially when considering how much potential beneficiaries are relying on inherited money to fund their day-to-day expenses.”
“Even though situations can change, it’s important for people to consider the levels of income they will need in retirement, what contingencies need to be in place and, as a result, be clearer with beneficiaries about what they can expect to receive.”
“More than half of people (53%) say they don’t know how much money they will need to support themselves through retirement.”
“Understanding this is an important step in avoiding being too generous by helping family out to the detriment of their own financial security, or alternatively, thinking they might need more money for retirement than they do.”
“A clear understanding of your financial situation and future needs is the building block for open conversations about inheritance and expectations.”
“People are relying on inherited wealth to fund essential parts of their lives, but many have no idea how much they are likely to receive.”
“This uncertainty could prove disastrous for future financial plans and makes it much harder to take steps now to meet future requirements.”
