UK Estate and End of Life Planning 2020

25% of Consumers take Estate Planning Actions

Only 25% of consumers have undertaken any of the actions normally associated with estate planning, like making gifts to loved one, gifting a home to children etc. This is less than the 35% which have made a will: for almost half of consumers estate planning is associated only with making a will. Consumers who have taken any estate planning action tend to own estates which have a much greater value compared with consumers who have not acted: in other words, wealthier consumers are more likely to have acted compared with less affluent consumers.

The most common action undertaken is making tax-free gifts to another person or charity/political party like money, property and possessions. Around half of the individuals making a gift were motivated to do so by a desire to cut their inheritance tax bill or reduce their eligibility for social funding. The second most common action undertaken is gifting a home to your children, with most consumers doing so to cut inheritance tax and social care costs. Very few adults have set up a trust for their children or taken out a lifetime mortgage in order to cut their potential inheritance tax liabilities or liability to pay for social care costs.

Other key findings from the research are:

35% of consumers have given estate planning a great deal of thought.
Consumers are aware of the value of estate planning and around half of consumers consider estate planning as part of being a good spouse/parent.
Despite strong interest in the subject, a significant minority of consumers face barriers to engaging in estate planning, these barriers including perception that it is not something for them because of the small size of their estate and the view that end of life planning only means making a will.
Around one-third of consumers say COVID-19 has made them think more seriously about what would happen if they died.
Only 15% of consumers have consulted a professional on an estate planning/end of life issue.

These findings come from the publisher's report: Estate and End of Life Planning 2020. The report studies the degree to which consumers in the UK engage in estate and end of life planning. Estate and end of life planning involves consumer actions to pass on their wealth to their loved ones and other people who matter in a way which is most effective in terms of inheritance tax, their own financial situation as they age, provision for loved ones after their death and where and how their passed-on wealth can be spent. The research is based on a survey of 2,093 consumers using MIS Group panel of UK consumers.

EXECUTIVE SUMMARY

For most people, immediate family are their main concerns
Most people own modestly valued estates
Few consumers have given estate or end of life planning serious consideration…
But it is an issue that evokes considerable interest…
And one where interest could be increased if the barriers where lowered
For most people estate planning is not age dependent
COVID-19 inspires greater interest in estate planning
Interest is high but this has not inspired action…
Because not enough consumers have been motivated
Most consumers need professional when planning or administering an estate…
But few have sought it

INTRODUCTION

Definitions

ESTATE VALUES AND DESCENDANTS

Spouse and children the main beneficiaries of a deceased estate
Three descendant groups
Average estate values are less than £250,000

ATTITUDES TOWARDS ESTATE PLANNING

Less than one-in-five consumers have laid out definite estate plans
Consumers appreciate the value of estate planning
The barriers to financial planning vary by age
Making definite plans means overcoming barriers

ESTATE PLANNING: MOTIVES

Almost half of consumers think estate planning should begin at any age
To attract younger consumers, link estate planning with life stage triggers
Age is by far the strongest influence on the importance of triggers
Concerns for loved-ones and equity the main drivers for engaging in estate planning
Without motivation, it’s hard to plan
The greater the estate value the greater emphasis on management and tax minimisation
Descendants also play a key role in driving motivation
Motivations change over time
COVID-19 inspires greater interest in estate planning

ESTATE PLANNING: ACTIONS UNDERTAKEN

Few consumers are motivated to act
Getting consumers to think on the issue helps drive action
Currently, it seems only the wealthiest have been inspired to act
If consumers give gifts, they tend to be within the tax limits
If a home is gifted, the whole value tends to be given
Only 4% have a protective property trust but one-in-five are interested
The life insurance gap
Funeral costs

ESTATE ADMINISTRATION

Most consumers need help and support when considering administering an estate
Some gaps in the appointment of an estate administrator/executor
Consumers prefer to appoint friends and relatives as executors

GETTING PROFESSIONAL HELP

Only one-quarter of consumers feel they can go it alone
Mature, affluent consumers the most likely to feel they can plan themselves
While one-quarter can go it alone, over six in ten want total or partial control
Being too self-reliant comes with risks
Less than one-in-five have sought professional help on estate planning issues
Affluent consumers by far the most likely to consult professionals
Law firms mainly used for end of life planning
Around four-in-ten consulted a professional in 2020
Most consumers consult advisors as and when needed

List of Figures

Figure 1 Who consumers consider as their descendants
Figure 2 The importance and profile of the descendant groups
Figure 3 The estimated mean average estate values
Figure 4 How much thought consumers have given to estate planning
Figure 5 Consumer Attitudes to Estate planning
Figure 6 Attitudes towards estate planning by age
Figure 7 Attitudes to estate planning statements by plans laid
Figure 8 When consumers should start thinking about estate planning
Figure 9 Triggers for thinking about estate planning by age
Figure 10 Main drivers of thinking about an estate by age, social grade, descendant focus and estate value
Figure 11 The main motives for engaging in estate planning
Figure 12 Average No. of motives for estate planning by the degree of thought given to the issue
Figure 13 The average value of estates by the motives for engaging in estate planning
Figure 14 The main motives for engaging in estate planning by descendant group
Figure 15 The main motives for engaging in estate planning by age group
Figure 16 The impact of COVID-19 on the motivation to engage in estate planning
Figure 17 The estate planning actions undertaken by consumers
Figure 18 Actions taken by how much thought has been given to estates in the event of death
Figure 19 Average estate values (£) by estate planning actions taken
Figure 20 The types of gifts given to reduce potential inheritance tax
Figure 21 Actions taken with regards to gifting a house
Figure 22 Interest in PPT
Figure 23 The ownership if life insurance and having insurance written into trust
Figure 24 Ownership of funeral plans and over50s life insurance
Figure 25 Consumer confidence/knowledge undertaking estate administration without professional help
Figure 26 The % of consumers who have a will and those with a will who have appointed an executor
Figure 27 Who consumers appoint as executors to their wills
Figure 28 Can consumers engage in estate planning without professional help?
Figure 29 Agreement with the estate planning statement
Figure 30 How consumers prefer to manage their estate planning
Figure 31 Consumer attitudes towards estate management by management preferences
Figure 32 Topics when consulting a professional advisor
Figure 33 The percentage of consumers consulting a professional about estate planning and allied topics
Figure 34 The professionals consulted on end of life/estate planning
Figure 35 Last time a professional was consulted and how the meeting was conducted
Figure 36 The relationships between consumers and professional advisors

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