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Over-55s back ‘pre-inheritance’ to help out family

Emma Lunn
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Emma Lunn

Nearly half of over-55s think making family members wait for an inheritance is wrong, but cite potential care costs as the biggest threat to gifting.

Research from equity release adviser Key shows that over-55s are increasingly supportive of giving pre-inheritances to family as financial support is more useful when relatives are younger.

About 45% of over-55s questioned believed that making family wait for someone to pass away to receive an inheritance is wrong – especially as the average age of inheritance is 47-years-old when most people hope to have already bought their first home.

Key found that more than half (53%) of those questioned would back tax incentives to give money to children on condition it is used for major purchases such a deposit for a property.

Key’s study shows it would also be welcomed by under-40s. More than two out of five (41%) questioned had given up on getting on the property ladder without family help, while 56% want the government to do more to tackle the intergenerational financial divide.

Key’s research found that the biggest potential threat to pre-inheritance and in-life gifting is concerns about the cost of care – nearly half (46%) of over-55s fear funding care in later life will stop them leaving an inheritance.

Funding care is seen as a bigger threat than running out of money to support normal living expenses in retirement. Less than a third (31%) of over-55s say retirement income worries will stop them leaving an inheritance.

Will Hale, CEO at Key, said: “While the recent budget did not tackle this issue, both the older and younger generations are keen to see more support for choices that promote intergenerational fairness. 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.”