Over 55s backing pre-inheritance but fears over care costs preventing them leaving inherit | Personal Finance | Finance


Over-55s are increasingly supportive of giving pre-inheritances to family, as financial support is more useful when relatives are younger, new research from equity release adviser Key shows. Around 45 percent of over-55s questioned believe making family wait for an inheritance is wrong – especially as the average age of inheritance is 47 years old when most people hope to have already made large purchases like their first home.

More than half (53 percent) would back tax incentives to give money to children, on the condition it is used for major purchases such a deposit for a first home.

Key’s study shows it would also be welcomed by under-40s, as more than two out of five (41 percent) said they have given up on trying to get on the property ladder without help from their family, and 56 percent want the Government to do more to tackle the intergenerational financial divide.

First-time buyers already benefit from paying no stamp duty on homes worth £300,000 or less, as well as support with Lifetime ISAs, but it appears more help may still be needed in the face of rocketing house prices.

Threat to pre-inheritance

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“Indeed, while the over-55 know that they need to consider their own retirement finances and potential care costs, they also want to help children and grandchildren financially.

“A pre-inheritance which contributes towards university fees, a first home or a dream wedding can make a huge difference and – in the case of equity release – puts money back into the economy that might otherwise have sat trapped in bricks and mortar.

“Whether that should be formalised with tax incentives is another question but clearly the decision to increase National Insurance partially to help fund social care attracted some criticism on being unfair to younger generations and a tax incentive around encouraging pre-inheritance in certain circumstances might help balance it.

“When thinking about leaving a pre-inheritance, the best place to start is often by having a discussion with an independent financial adviser who will help you ascertain how you can do this without negatively impacting your financial stability.

“They may suggest using your savings, investments or housing equity as these can all be potential sources of a pre-inheritance for your family.”

Key’s research shows the majority of people do intend to leave an inheritance if they can, with two-thirds (66 percent) wanting to leave money to family or children.

Just 12 percent say they have no plans to leave money to anyone, with 17 percent instead intending to leave money to good causes.

Those who live in the East of England are the most likely to leave an inheritance to their family, with 73 percent of people who live in this region saying they plan to do so.

The regions of the East Midlands (71 percent), North West (68 percent), South East (68 percent) and Northern Ireland (67 percent) also had a higher proportion of people planning to leave an inheritance than the UK average of 66 percent.

People in the West Midlands are the least likely to leave an inheritance, with just 60 percent of respondents saying they planned to.

The North East (65 percent), Scotland (63 percent), London (63 percent) and Yorkshire & The Humber (61 percent) also had a smaller percentage of people planning to leave an inheritance than the national average.

The two remaining regions, the South West and Wales, both matched the UK average for people planning on leaving an inheritance with 66 percent.

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