Over 80% of the population are unaware their offspring will face an inheritance tax bill if they delay inheritance until aged 21, according to research from Saga.
The survey of 1,901 UK adults reveals 60% think their children should inherit at age 21, rather than age 18, but 83% are unaware that if their offspring do not inherit from a trust at 18 years of age they will be taxed.
Under new IHT laws, inheritance after age 18 will be taxed every 10 years on the value of all assets above the IHT threshold of £285,000, including any income arising from the assets.
The survey also suggests it is not just the age of inheritance which is confusing people, as when it comes to who receives assets, half of the population predicted that without a will a spouse will automatically inherit 100% of the deceased’s estate.
But if there are surviving children, the spouse is only entitled to receive the first £125,000 of the estate plus personal chattels.
A further 41% of respondents admitted to not having a will and almost two million adults have changed their marital status without updating their will, not realising marriage revokes an existing will and on divorce an ex-spouse is treated as deceased.
Almost one in three (28%) have never updated their will since it was first written and the majority have not updated it for five years or more.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7034 2680 or email [email protected].IFAonline
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