More than half of UK adults with investments did not know how much money they could leave their loved ones before being hit with an inheritance tax bill, research has revealed.
Research from Octopus Investments found a further 48 per cent had never spoken to their adviser about inheritance tax.
Under current rules, an individual does not pay inheritance tax if the value of their estate is below the £325,000 threshold.
Earlier this year, Octopus Investments surveyed around 1,000 people with investments partly or fully managed by an adviser as well as 200 financial advisers.
The survey found some 11 per cent did not want to think about their inheritance situation while 16 per cent thought it was too early to start thinking about it.
However, the most common answer was simply that their adviser had not brought it up with them with 29 per cent giving this as a reason.
The study discovered another knowledge gap on the topic with half of investors not expecting their estate to be affected by inheritance tax.
Overall, 55 per cent of investors had not spoken to family or beneficiaries about inheritance tax, despite 79 per cent saying they plan to pass their wealth on to their loved ones when they die.
Of this number, 29 per cent said they had just not got round to it yet, but 19 per cent admitted it was because they did not know how inheritance tax would affect them.
Julie Greenwood, key partnerships manager at Octopus Investments, said: “Advisers do a wonderful job helping their clients build their wealth over their lifetime, and more of it can be passed on with effective planning.
“Starting the conversation by talking to clients about what problems they want their money to solve when they pass away is key. It is important to form that emotional connection by showing that effective planning means giving their grandchildren a wonderful wedding or getting on the housing ladder, or even topping up their children’s pension pots for a comfortable retirement.
“Moreover, adviser’s businesses are valued on advice fees and assets under management. By being proactive with client’s and their families on estate planning, it can increase the likelihood of retaining those assets when the client passes away and acquiring new younger clients with additional planning needs.
Greenwood added that in light of new consumer duty regulations, it was important to help customers avoid “foreseeable harm”.
tara.o'connor@ft.com
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