Inheritance on Account
According to a recent survey one in five British people have already received all or part of their inheritance.
Researchers say that millions of young adults, or NINNIs, (‘Need It Now, Not as Inheritance’) have gone directly to their parents for an upfront slice of their inheritance. Among the reasons given for the hand outs were deposits for property and help with debts. The increase in tuition fees and student loans are likely to fuel this trend.
The research, commissioned by Skipton Financial Services, examined the financial health of 1,000 people under 35 and 1,000 over 50. Their key conclusions were:-
- 16% of under 35’s have received nearly £50,000, with one in ten having had £100,000 or more.
- One in 20 parents have already handed over all their liquid assets, leaving only property to pass to their children upon their death.
- The average lifetime gift is £34,000. The children receiving the gifts had an average age of 28.
- Over half the under 35’s want their inheritance before they reach 40.
- Although children are expecting an inheritance, many have never actually had a conversation with their parents about it..
- A fifth of people over 50 don’t have any plans to pass on an inheritance.
These findings do not come as a huge surprise to the inheritance disputes team at Slee Blackwell. The credit crunch, unaffordable mortgages, high unemployment and rising university debt have placed a strain on the finances of young adults; it’s no wonder they are turning to mum and dad, who have had the benefit of more prosperous economic times.
The survey found the main reasons for parents being willing to part with money during their lifetime were; that they wanted to see them enjoy it now rather than when they’re gone (54%); it makes sense to give them money while they can afford it (46%); and they didn’t want to see their children struggling financially (35%).
There is also the obvious tax advantage of reducing the amount of money liable for IHT. And the steady rise in property prices has also meant that parents have plenty of equity to help out.
The research mirrors what we have been finding during recent times, that parents are more willing than ever to give their children a financial helping hand. However, the trend is not without its problems. If lifetime gifts favour one child over another, tensions can arise within the family. Resentment can fester, reaching boiling point when the parents pass away and siblings argue over how remaining assets are distributed. Our inheritance disputes team would therefore recommend that parents deal with these issues openly and take professional advice when making their will. Failure to do so could result in whatever money is left in the estate being fought over in a court battle contesting a will.