The latest IHT statistics were released by HMRC at the end of July 2018 and largely refer to 2015/16. As a result, they don’t reflect any impact that the Residence Nil Rate band may be having. But what they do show is that, as we age, our cash assets accumulate.
Of course, we all aim to build up assets as we move through our working lives. We look to create a nest egg that allows us and our families to do what we want and to have what we need now and in the future. And for many of us, the future goes well beyond our own lifetime. It extends to our children and our grandchildren.
Why then, as we move closer to the end of our lives and in particular, as we move further into retirement, do HMRC’s figures show that cash assets grow as the age of death rises? One reason given for this by HMRC is, “at advanced ages, beneficiaries of a life insurance policy upon death of the holder, are more likely to receive this payment, and less likely to take such policies out themselves.”
Another very plausible assumption is that, as life expectancy is increasing, along with complex diseases like dementia, ongoing family demands on older members and the uncertainty of the care cost landscape, there is a tendency to stockpile cash to offset this unpredictability. The bad news is that this is likely to leave that stockpile vulnerable to both inflation and IHT, drastically reducing any left to pass on to future generations.
The good news is that there is an option for advisers looking to resolve this issue for their clients; Oxford Capital’s Estate Planning Service provides both real returns and the flexibility and control of allowing investors to switch between growth, income and access options as circumstances change.
For more information on Oxford Capital’s Estate Planning Service, click here.