47% of law firms regularly advised widows who are facing financial hardship to consider downsizing but 68% say that they are reluctant to consider this solution, according to research from equity release referral service Key Partnerships.
Financial mismanagement – such as lack of joint pension provision – by partners is the main reason, many widows face hardship according to 62% of law firms questioned. Around 41% say living expenses and bills following a partner’s death are also too high for widows.
The research also identified probate delays as a major cause of financial hardship for widows – 51% of law firms said clients had faced issues in sorting out the estate of their loved one while 30% say widows had discovered previously undisclosed debts.
55% of law firms suggest downsizing as a way to cut bills and help boost cash flow and 65% suggest clients look at this as an option to repay an existing mortgage or make a profit. However, this may not be a viable option for everyone with one in four estate agents revealing that more than 50% of their clients who are looking to downsize have failed to find a new home or given up looking within the last two years.
Just 24% of law firms recommend equity release as an alternative to downsizing as most admit they are unaware it is possible solution. The main barrier to suggesting equity release is that 56% admit to having very little knowledge of plans while 59% say they are not trained to offer advice. 20% suggest a second charge mortgage.
Jason Ruse, head of Key Partnerships, said: “No one wants to be worried about financial matters following the death of their partner but the simple fact is that far too many people are faced with these difficult choices.
“As part of the probate process, law firms will naturally make suggestions that they believe will put their clients on a firm financial footing but the idea of selling the family home is simply not an option for some people.
“While equity release is not right for everyone, law firms should have a working knowledge of this product if they are going to recommend options such as equity release or second charge mortgages. These products are only available from qualified equity release advisors and they can help people to find the best option for their individual circumstances.”