IHT clients getting younger but advisers still concerned many are engaging too late

Inheritance tax (IHT) and estate planning clients are getting younger as demand increases, but advisers are still concerned that people are engaging with the issue too late, analysis from Downing has shown.

Its study found 84 per cent of advisers and wealth managers reported the average age at which clients first contacted them about IHT and estate planning had fallen over the past year.

This included 27 per cent who said the average age had fallen considerably, with interest in support for IHT and estate planning on the rise.

Despite this, 67 per cent of advisers felt clients were still typically engaging with IHT and estate planning too late.

On average, advisers began engaging with clients on estate planning when the client was aged 46, although 39 per cent of advisers said the average age was over 50.

Advisers and wealth managers estimated that 27 per cent of their client base had a potential IHT liability currently, with 42 per cent saying they proactively contact clients about IHT and estate planning.

A further 32 per cent said they relied on a combination of proactively contacting clients and waiting for clients to raise the issue, while 26 per cent left approaches on IHT to clients.

Downing’s survey asked advisers what the biggest gaps in clients’ IHT and estate planning were, and 47 per cent said clients were unaware of the need for IHT and estate planning.

Almost two fifths (39 per cent) of advisers stated clients were unaware of the upcoming inclusion of unspent pension pots in estates for IHT purposes.

Meanwhile, 35 per cent said clients had limited awareness of how trusts can be used as part of wider estate planning strategies to pass on wealth efficiently and potentially mitigate inheritance tax liabilities.

“The biggest risk in estate planning is often delay,” warned Downing head of product, Rebecca Ward-Howes.

“That risk is only growing: Business Relief reforms are already changing the picture, and from April 2027, unused pensions will be pulled into the IHT net for the first time, catching out many families who assumed their pension was safe from IHT.

“It’s encouraging that clients are engaging with advisers earlier than before but our research shows many are still waiting until their options have narrowed.

“As more families find themselves exposed to potential IHT liabilities, early engagement and clear planning have never been more important.”

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