On 5 January 2017 the Institute for Fiscal Studies published a report on “Inheritances and Inequality across and within Generations”.
The report highlighted how important inherited wealth has become for young adults, and how young adults now have a greater expectation than previous generations have had that they will receive an inheritance. 75% of people born in the 1970s were reported to have received or are expecting to receive an inheritance – the figure for those born in the 1960s is 68%; in the 1950s is 61%; and in the 1940s is 55%.
There has also been an increase in the wealth of older people, which is said to be largely attributable to the rise in house prices. This, at the same time, means that younger generations are finding it difficult to get on the property ladder to begin to accumulate wealth of their own.
In line with the increase in wealth, there has also been a rise in number of people intending to leave an inheritance, which has increased from 60% in 2002/03 to 72% in 2012/13. In order to ensure that the people you wish to provide for from the assets you have built up over your lifetime can benefit on your death, you should ensure you have a will in place.
Under the law of England and Wales, an individual has freedom of testamentary disposition, allowing us to leave our assets to whomever we wish. There is no obligation on us to leave assets to our children. However, the Inheritance (Provision for Family and Dependants) Act 1975 enables certain people to apply to the Court for financial provision from an estate if they feel that the deceased has not made reasonable financial provision for them, in light of the claimant’s circumstances. A child, or someone who has been treated as a child by the deceased, falls within a category of person who is able to bring a claim.
There have been a number of widely reported cases of contested will claims over recent years, one of the most notable being Ilott v Mitson, which Roman discussed in his post. With older people having more assets to leave, and the significant impact receiving an inheritance is likely to have on younger family members, it is perhaps unsurprising that the number of people challenging a will has increased.
The conclusion I came to after reading the report was that giving careful consideation to whom you wish to benefit on your death, and taking professional advice when making your will, looks to be becoming increasingly important.