Elderly widows are reluctant to downsize to tackle their financial problems, according to new research from Key Partnerships.
A survey from the equity release referral service found that nearly half of law firms (47%) regularly recommend widows downsize their home to raise much needed funds but find that in more than two-thirds of cases (68%) they do not want to consider this option.
According to nearly two thirds (62%) of law firms, the main reason that widows struggle after their husband has died is poor financial management – most likely because they have a lack of joint pension provision. Two in five (41%) say that bills and living costs in the wake of their partner’s death are simply too high for widows.
Problems with probate can also exacerbate widows’ money worries – over half (51%) of law firms say clients have had problems sorting out their loved one’s estate, with close to a third (31%) discovering debts they were not aware their partner had.
Downsizing is often recommended by law firms as a means of either boosting cash flow or raising lump sums to repay debts. However, in practice, this may not be a viable solution. Key Partnerships’ survey also reveals that one in four estate agents report that more than half (50%) of their clients who want to downsize give up within two years because they cannot find a suitable property.
Only a quarter (25%) of law firms suggest widows use an equity release plan to raise much needed money. One in five suggests widows use a second charge mortgage on their home to raise cash.
Jason Ruse, head of Key Partnerships, says: “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.”