Rise of the HeirBnBs

Spend it all millionaires drive rise of 'HeirBnBs'

*Canada Life’s 2019 IHT Monitor*

  • One in five (18%) millionaires aged 45+ don’t expect to leave anything behind for inheritors
  • Almost half (42%) are worried about giving away funds that they might need in retirement

27th February 2019, London – Almost one in five millionaires aged 45 and above (18%) are planning to spend all of their funds in retirement, creating inheritors who are HeirBnBs, or ‘Heirs But not Beneficiaries’, according to research from Canada Life.

Millionaires are in fact slightly more likely to spend all of their funds in retirement than those with lower value assets.

Value of assets % who intend to spend it all in retirement
All (£325,000 and above) 16%
£325,000 - £500,000 16%
£500,000 - £1,000,000 15%
£1,000,000 and above 18%

Among those aged 45+ with assets worth £325,000 and above (the standard nil rate band for IHT).

The research highlights the fear even among the relatively wealthy that retirees will find it difficult to leave anything for future generations as a result of increasing longevity and the costs of social care.

When those with an estate worth £1m or more were asked about their key financial concerns, close to half (42%) were worried about giving away funds that they would need in retirement, significantly higher than the overall average (29%). A third (33%) were concerned they did not have enough saved in pensions to cover their own retirement.

Neil Jones, ican Technical Manager, Canada Life said:

“The fear of not having enough for later life is something that is universally shared – regardless of your level of wealth. The practical upshot is that anyone who is relying on receiving a significant inheritance should be wary – it simply may not happen.

“Yet there are plenty of things that can be done. Via trusts, such as a flexible reversionary trust or discounted gift trust, it’s possible to gift away parts of your estate before death, and save on inheritance tax, yet retain some access if you need the funds. This can be a godsend for inheritors who might otherwise receive nothing, or lose out to HMRC despite the wealth of their parents.

“The use of trust-based solutions can help with retirement and long term care provision, and allow the ability to pass what money is available down through the generations. The first step is to talk to an adviser.”

Survey of 1,002 UK consumers aged 45 or over with total assets exceeding the standard nil rate band of £325,000. Carried out in December 2018. Percentages may not add up to 100 due to round or multiple answer questions. Research conducted by Atomik.