Article from The Daily Telegraph. London

Two thirds of adults aged under 35 expect to receive an inheritance but half of those aged over 50 are already spending the money, according to a survey of 2,000 people by Skipton Financial Services.

More than a third of the older group said leaving an inheritance would put a strain on their finances and more than a fifth said they did not expect to leave anything to anyone else when they die. That could lead to awkward scenes at the graveside – if not before – and leave many adult children bitterly disappointed.

Andrew Barker, managing director of Skipton Financial Services, said: “It is no surprise that with rising taxes, university debt growing by the year and mortgages much more unaffordable than before the credit crunch, young people are more and more desperate for a financial helping hand from their parents.

“It is particularly scary that, while almost two thirds of youngsters are expecting to receive an inheritance, for the vast majority of these it is purely an assumption as only one in four has had a conversation with their parents about the inheritance.”

Mike Warburton of accountants Grant Thornton said: “There will always be more people willing to accept money than those who are happy to give it away and many people are now reaching retirement with pension funds that have not done as well as they hoped.

“There are broadly three views on inheritance. Those who resent being taxed after death, those who think that it is the best time to raise tax because you are past caring and those who don’t want to leave money to the Government or their children but want to enjoy it themselves. I suspect the latter is the largest group.”

Experts recommend that families discuss these topics sooner rather than later because gifts made more than seven years before the donor’s death are exempt from inheritance tax (IHT). This tax applies at a standard rate of 40pc on estates worth more than £325,000 per individual or £650,000 for married couples and members of civil partnerships.

IHT receipts have collapsed by 29pc since the credit crisis began and married couples have been allowed to automatically transfer nil rate bands between them.

Figures from HM Revenue & Customs show receipts from IHT fell from £3.8bn in 2007/2008 to £2.7bn last year. The number of estates that paid this tax fell even more sharply – by 36pc to 15,427 cases – after married couples and civil partners were allowed to automatically transfer the nil rate band between them.

By Ian Cowie

5:41PM BST 15 Aug 2011

 

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