An article that was published on the Financial Times Advisor website earlier this month reports that the British public are not taking adequate steps to secure and protect their legacy.
According to data gathered by Zurich and YouGov, only 18% of the 2,000 adults questioned said leaving an inheritance was an important factor when planning for their retirement. This figure increased only slightly to 21% when applied to parents with children to think about.
With new pension reforms potentially affecting an individual's inheritance and the tax bill of the beneficiary, a lack of suitable estate planning may result in them being subject to heavier taxing.
The report also states that those aged up to 75 can now pass on their pension pots tax-free, unlike other forms of investments or savings accounts, which are all subject to Inheritance Tax. However, it notes that if a person dies aged 75 or over, then a pension can be accessed by beneficiaries in the form of income. This approach will result in it being taxed at a rate of 20%, or even up to 45% if it is accessed as a lump sum.
Alistair Wilson, the head of retail for Zurich, said: "Pensions are now a valuable way to pass on wealth, but savers need to make the right decisions early."
Are you shocked at how few people consider inheritance planning to be an important consideration?