Younger generations’ reliance on inheritance being undermined by lack of communication

Younger generations are expecting to rely on inheritance for their financial security, but a lack of communication among families means the majority do not know how much they will receive, a report from Aviva has shown.

Its Intergenerational Wealth Shift Report revealed that 37 per cent of people who anticipated receiving inheritance believed they would be financially dependent on it, while 43 per cent said it was essential to their financial security.

However, 60 per cent of this group said they did not know how much they would receive as part of their inheritance.

Aviva noted that this raised concerns that many households could be making important financial decisions based on assumptions, especially where inheritance was expected to help pay for everyday living costs, clear debts, and fund retirement.

As housing costs rise, savings challenges increase, and pressure on household finances intensifies, inheritance was found to be an increasingly important part of many people’s financial plans.

While 54 per cent of survey respondents felt comfortable discussing their plans for inheritance with their families, 53 per cent said their family did not need to know how much they would receive.

Furthermore, 51 per cent of people with children had not had inheritance discussions with their beneficiaries, although 31 per cent planned to do so.

Younger people were found to be more reliant on inheritance than older people, and were more likely to challenge a will if they believed it was unfair.

Aviva said the lack of communication could be driven by uncertainty about future financial needs and how much money people would need in retirement.

Over three fifths (61 per cent) did not know how much money they might have left and 53 per cent did not know how much they would need to support themselves.

Inheritance tended to go across generations before it went down, with 59 per cent of respondents planning to leave all their estate to their partner.

“There’s a crucial role for financial advisers within inheritance and estate planning discussions, which goes beyond simply putting the mechanics in place,” commented Aviva Adviser Platform director, Lorna Whalley.

“While recognising that situations can change, financial advisers can encourage clients to consider the levels of income they will need in retirement and what contingencies need to be in place.

“More than half of people say they don’t know how much money they will need to support themselves through retirement.

“This is an important step in helping people to avoid either helping family out to the detriment of their own financial security or thinking they might need more money than they actually do.

“A clear understanding of your financial situation and future needs is the building block for open conversations about inheritance and expectations.”

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