Can you afford to rely on an inheritance?
Posted on May 03, 2019
- We've got your back
- Can you afford to rely on an inheritance?
- Will you still be going strong at 100?
A number of our blogs recently have focused on how people are living longer and an increasing number of folk are still going strong at aged 100 and beyond.
A recent article on the Bloomberg website looked at another side to this story – the heirs of billionaires who are having to wait longer for their inheritance.
According to the article, there were an estimated 747 billionaires in North America in 2017, up from 490 in 2010, which means that the wealthiest 1% control 37.2% of the country’s personal wealth. The rich are also living longer than ever, adding years of asset accumulation.
This is causing issues with younger generations of the same family, who are waiting to take the reins of the business but are not able to because their father or, in many cases nowadays, their grandfather is still very much in control.
“Stepping into the shadows is something that older people don’t want to do. It’s kind of scary,” said John Davis, founder of Cambridge Family Enterprise Group, which advises clients on how to successfully hand off power.
According to the article, when Tom Benson died last year at the age of 90, he left behind a sprawling empire that included two professional New Orleans sports teams and a group of car dealerships. Unfortunately for him, he spent some of the last years of his life squabbling with heirs over who would get what.
The legal battle was marked by claims Benson wasn’t mentally competent when he made sweeping changes to his estate plans. His daughter and two grandchildren alleged he was acting at the direction of his third wife. Tom Benson rejected the claims, and a Louisiana court agreed. When all was settled, his wife ended up with the New Orleans Saints and the New Orleans Pelicans and his daughter and two grandchildren got most of his other holdings. But it took a lot of time, a lot of lawyers - and presumably a lot of money.
While the family of US billionaires are trying to get a ‘slice of the cake’, here in the UK this increase in longevity has changed family dynamics in only a generation or two. Not so long ago, many retired people or those just reaching retirement could almost rely on receiving an inheritance from their parents which might partly fund their retirement or, at least, give them a little breathing space financially.
Nowadays many people in their 60s and, indeed, their 70s, still have their parents around. While this is, of course, a positive thing, the fact is that the active elderly parents are potentially busy using up their funds on enjoying their own lives, while more frail ones might be in a care home, with the family home having been sold.
Every client we’ve spoken to who has seen a parent have to sell their property to go into care, has wanted them to get the best care possible.
What it does highlight though, and what we always say here at The Goodman Partnership, is never to rely on something in the future that you can’t be sure about. Don’t assume that you’ll be able to work until you’re 70, don’t get tempted by a ‘too good to be true’ pension scam, don’t rely on your current good health continuing into old age and, equally, don’t assume you’re going to benefit from an inheritance or win the lottery!
At The Goodman Partnership – which provides pension advice in Tunbridge Wells - we can help you to understand if your lifestyle needs can be met in retirement and how the different options of drawing benefits compare.