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Three out of five people in the dark about estate planning

12th December 2008 Print
More than a year after the introduction of the Inheritance Tax (IHT) transferable nil rate band (NRB), nearly three out of five people are still unaware of the new rules and the tax implications, according to research from Standard Life.

The changes, which were introduced in the Pre-Budget Report on 9 October 2007, allow the estate of the surviving spouse or civil partner to claim any unused NRB from the first spouse's estate. This applies where the NRB of the first spouse or civil partner to die was not fully used in calculating the IHT liability of their estate, and brings the enhanced nil rate band of the surviving spouse to potentially £624 000, making a significant difference to estate planning.

The latest Wills and Trusts research report from Standard Life also shows that while over three quarters of people would turn to a solicitor for advice on estate planning and 54 per cent would consider using a financial adviser, nearly half of respondents (47 per cent) also use the internet to do their own research.

In addition, nearly two thirds of respondents were not aware that an IHT exemption exists for gifts made from left over income.

Julie Hutchison, head of estate planning, Standard Life said, "It is disappointing that despite extensive media coverage of the new transferable nil rate band, the changes introduced last October have not been fully understood by the majority of people. Our research highlights the lack of awareness of the benefits of thorough estate planning, and the importance of financial advice for clients in reducing their liability and saving their loved ones unnecessary paperwork and IHT.

"IHT is a highly complex legislative area of financial planning; having the facts explained by an expert in plain English can make all the difference to ensure consumers aren't leaving themselves or their family open to an unnecessary IHT burden."

Less than half (46 per cent) of people have a current will drawn up

Despite the credit crunch and difficult economic conditions, almost a quarter of people (22 per cent) plan to leave money to charity in their will.

Nearly one in ten (9 per cent) have experienced difficulties dealing with the financial or legal affairs of an elderly relative. Over half of these relatives did not have a power of attorney in place.

Forty per cent of people feel strongly about the kind of funeral they want, although only 19 per cent have their funeral wishes written down anywhere.

Nearly half (49 per cent) of all people do not store all their important documents (will, funeral arrangements) together or told their family where to find these.