The survey, which collates the views of 270 millionaires with at least £1m in liquid assets, reveals that while 37% admitted to suffering serious conflict within the family when it came to dividing up the money and assets, 58% did not have an up-to-date will in place.
Coutts estimates that £1trillion will pass on to the next generation, yet the report shows that one fifth of parents are keeping their true wealth a secret from their children, fearing it will quash their children’s aspirations, or that they might reveal too much information to people who may then befriend them ‘for the wrong reasons’.
Of particular concern was the rise in publically available information, fuelled by the rise in social media sites, about confidential family affairs. Despite this, barely a quarter of parents would consider insisting on or even raising the idea of a prenuptial agreement to inheritors, despite divorce rates of 42% in the UK according to the Office for National Statistics.
More than half the millionaires questioned worry about paying too much tax, yet nearly half can’t decide how to divide up their estate between heirs. One third of parents plan to pass on no wealth until the death of both partners.
Juliette Johnson, Executive Director at Coutts said the problem of protecting assets was exacerbated by the number of second and subsequent marriages.
“In the UK, 46% of marriages are subsequent marriages and with 2.5 million step-children in the UK, blended families and step-grandchildren are now part and parcel of family life which can add further complication to succession and inheritance planning,” she said.
“Our research shows that unless there is a clear plan and open communication about the succession process, family members can feel frightened and frustrated about how the family assets and money are divided following the death of both parents. This is already an emotional time – and can so easily lead to conflict, which in some instances can split families and cause long-term damage.”
Coutts suggests the following steps to help wealthy families pass down wealth in a way that meets their vision and objectives:
- Start early - many families leave planning too late to ensure a successful and smooth transition of wealth to the next generation. Communication is key;
- Make a will - even if you have a will, it can pay to ensure that it’s up to date;
- Use a trust - this can enable you to give assets away while restricting or directing how and when they are used;
- Consider a pre-nuptial agreement - well drafted pre-nups are increasingly given weight in divorce decisions in the UK and can now be a useful mechanism for protecting wealth owned or generated before a marriage.