Breaking the inheritance taboo

Money and death are two things that many of us often avoid talking about, so perhaps it's no surprise that the majority of people who received an inheritance sum in the past five years did not discuss its value with the benefactor beforehand.

While some receive more than they had anticipated, others get less -- potentially impacting their future plans -- or even end up in family disputes over the assets.

Average inheritance value

Almost a fifth (17%) of UK adults have received an inheritance within the last five years, at an average value of £35,000, according to new research from Canada Life.

A third (33%) of beneficiaries said they have or will put the money into a savings account. Other top responses included:

• Invest for the future - 19%
• Pay off debts - 15%
• Renovate a property - 14%
• Travel - 12%
• Gift the money to children or grandchildren - 12%

Yet for over half of those (56%) receiving an inheritance sum -- the equivalent of 5.1 million people -- the amount came as a surprise.

In fact, only 12% knew exactly how much they would get. Nearly a third (31%) said they received more than they were expecting, and 26% received less.

Huge disappointment

Separate research by will writing service Farewill shows that millions of people are making plans based on an inheritance they will never actually receive.

As many as 3.5 million people are thought to have made financial plans to spend expected inherited family wealth, only to receive nothing when their loved ones pass away, This is Money reports.

This problem stems from people failing to make or update their will or discuss their plans with family members.

"With the rise of property prices over the last four decades, the expectation of intergenerational wealth transfer is higher than ever," said Farewill chief executive Dan Garret.

"These great expectations can lead to huge disappointment if not managed properly."

Family disputes can also arise -- with potentially high stakes as the £6tn wealth of the baby boomer generation is transferred to the next generation.

A study conducted by Farewill on behalf of the Express reveals that nearly 40% of people have had disagreements with siblings and other family members regarding inheritance allocations.

Open conversations

"It's understandable that many people shy away from talking about inheritance," said Stacey Love, tax and estate planning specialist at Canada Life. "However, not having these important conversations means that those who are receiving can be caught by surprise when the time does come.

"We would encourage everyone to break the taboo and have open conversations with your loved ones about your financial circumstances and inheritance plans. Being open about your wishes and discussing any potential unexpected costs that may arise in the coming years, such as care costs, allows you and your family to take control and make necessary financial arrangements now that will help to ensure that you're in good stead for the future."