Our latest YouGov survey on the future of wealth transfer asked whether individuals aged 50+ across the UK had taken professional advice on estate planning. The results were eye-opening: only 16% of respondents had done so. From a legal and practical standpoint, this is a concern. In our experience, DIY wills and estate plans frequently contain series and costly mistakes – errors which only come to light after death, when it’s too late to put things right.
The value of advice
I have been a professional adviser on inheritance tax since it was named as such in 1986 (and on its predecessor, capital transfer tax, very nearly since its introduction some 12 years earlier). I was encouraged by virtually all of the responses to a question on the desirability and intentions of seeking professional advice on wealth planning in general and inheritance tax in particular.
On the purely positive side, nearly one sixth of respondents have already sought such advice, with the proportion rising (unsurprisingly) with age – although still only to a quarter even among those over 75. And another 29% would consider taking such advice in future, this (again unsurprisingly) tilted towards somewhat younger respondents for whom the actual impact seems a more distant prospect. This is obviously good news for those professional advisers providing such advice in the past or the future – such advice is always aimed at a moving target, as the substantial prospective changes to IHT so clearly demonstrate; good professional advisers will build an ongoing relationship and will react to changes in their clients' personal circumstances, as well as to inevitable further changes in the law.
Why professional planning matters – especially early on
But much more important than work creation for professional advisers is the reassurance to families across the generations that consideration is being given to preserving family wealth for those families. There seems no doubt – and it is clear Government policy - that the "take" from inheritance tax will rise. The changes to business and agricultural property relief and bringing pensions within the IHT net will certainly bring increased tax. But that rise will not be evenly or proportionately spread – how the changes will affect individual families will depend on what those families have done about it. There is a good deal that can be done, perfectly legitimately and indeed positively encouraged by inheritance tax rules. So the fact that nearly half of those responding have taken or are considering taking professional advice is encouraging. That intention being more widespread among younger respondents is even more encouraging, as the benefits of IHT planning are most evident when it is undertaken as early as possible. Indeed a well-timed and planned approach can for most families potentially affected by IHT remove the threat of the tax entirely – the proportion of estates affected is likely to remain at under 10%, but the changes mean that this will only be so with a rise in planning.
DIY estate planning: hidden risks and hard lessons
Only 16% of respondents taking professional advice is a red flag. In our experience, DIY wills frequently contain critical errors that only come to light after death – when it’s too late to correct them.
We regularly encounter examples such as wills that were not properly witnessed, requiring costly court applications to prove their validity. In some cases, no executors have been appointed, meaning family members must seek court approval to take control of the estate. Other wills fail to account for all of a person’s assets, which causes part of the estate to fall into intestacy. Overly specific or ambiguous bequests are also common, leading to confusion, disputes, and sometimes the unintended exclusion of beneficiaries.
Crucially, many DIY wills lack alternate beneficiaries or a “residue clause”, meaning assets acquired later in life may have no legal destination. These issues frequently lead to delays in winding up estates, increased legal and administrative costs, and emotional conflict at an already difficult time. Worst of all, the person’s true intentions may not be honoured – because by the time errors are discovered, it’s too late to ask what was actually meant.
Room for improvement – and a message of reassurance
But why are the rather negative answers given by nearly half the respondents perhaps equally encouraging for professional advisers? Nearly 50% prefer to manage matters themselves or do not see the need for professional advice at all. Professional advisers thus have a huge potential audience to be persuaded that advice will indeed benefit their families and will in fact often save them large sums of money in the medium to long term. The changes to IHT not only bring large numbers of new taxpayers into the clutches of the tax (particularly through the extension of the tax to pension funds), they also vastly increase the complications for families affected. Individuals doing their own planning only have their own situation to consider, while experienced professionals can bring examples of situations already encountered and a range of comparable problems which they have met.
When it’s too late: Learning from inaction
Sadly, even if exhortations to take appropriate advice fall on deaf ears, this can be a significant source of work for professional advisers. If nothing had been done, or, worse, something had been done that should not have been, there is often work required to try and rectify matters. In such situations – never as desirable as careful and early planning - the adviser can feel as if following the horse that has already bolted, profiting from the manure of mistake or inertia. So potential clients intent on doing nothing, or doing something themselves, are often not the end of the story for their families or for professionals. In many cases, they only emphasise what could have been done, or what could have been done better. This is often a poor substitute for proper plans made at the right time.
Explore the full findings
Our Future of wealth transfer survey offers a unique insight into the hopes, hesitations and expectations of people across the UK when it comes to passing on wealth. To see more data and expert commentary, view the full survey here.
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