New research commissioned by UK top 50 law firm, Birketts, has found that most working adults in the South East are relying on inheritance for their long-term financial security, yet there is a lack of understanding about how wills actually work.
47% of working adults over the age of 25 in full or part-time employment (excluding zero hours contractors) in the South East expect inheritance to be important to their long-term financial security. This increases to 49% for working adults over the age of 25 in full or part-time employment across England & Wales.
The survey also found that half (50%) of respondents in the South East are confident that they will receive an inheritance in the future.
However, despite the importance being placed on inheritance for financial security, the survey uncovered significant gaps in understanding about wills and how they work:
89% of respondents believe marriage does not automatically cancel or override an existing will
over a quarter (27%) believe closest relatives automatically inherit everything without a will
16% believe closest family relatives inherit a share even if deliberately excluded from a will
12% believe children are always guaranteed a share
62% do not believe a will covers all assets owned, including jointly owned property, pensions and life policies.
In addition, the survey found that a large proportion of adults over 25 in the South East do not have a valid will, with over a third (38%) of respondents claiming to not have one. This is higher than the general population of working adults over the age of 25 in England & Wales (34%). When investigating the reasons for not having a valid will, the survey found:
one in five (20%) respondents without a valid will were prevented from drafting one by the cost
over a quarter (27%) of those without a will said nothing had prevented them from drafting one, suggesting a perceived lack of importance or urgency
over a quarter (27%) of those without a will said they did not have sufficient assets to justify one, suggesting a misconception that wills are only for the wealthy
19% of those without a will said they were prevented from doing so by a lack of understanding or knowledge
17% of those without a will said they were too young to require one.
Commenting on the findings, Bernadette Baker, Partner and Head of Private Client at Birketts, said: “These findings reflect the reality that inheritance is becoming an increasingly important part of many people's long-term financial planning. Rising house prices, longer life expectancy and the cost of retirement mean that some individuals are making financial decisions today on the assumption that inherited wealth will play a role in securing their future financial position.
“We also see examples of people stretching further to buy property, carrying mortgage debt later into life, or relying on interest-only borrowing arrangements with an expectation that future inheritance may ultimately help repay debt or support retirement plans. Whether justified or not, that expectation appears to be becoming more common.
“Against that backdrop, it is concerning that there remains such a significant gap in understanding about wills and succession planning. Many respondents hold misconceptions about what happens when someone dies without a will, while more than a third do not have a valid will themselves. The result can be uncertainty, delay, increased cost and outcomes that differ significantly from what individuals and families intended.“If inheritance is increasingly viewed as part of people's financial future, there is a strong case for improving public understanding of estate planning and encouraging more people to put appropriate arrangements in place.”
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